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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Softlanding Systems, Inc v KDP Software Ltd & Anor [2010] EWHC 326 (TCC) (26 February 2010) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2010/326.html Cite as: [2010] EWHC 326 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/02/2010

His Honour Judge Wilcox:

Introduction

This is a claim for damages for breach of contract and/or the transfer of ownership of the defendant's software source codes and copyrights and declarations of indemnity in respect of software and use.

The defendant denies such breaches or entitlement and by counterclaim seeks an injunction restraining the claimant; and third party from infringing the defendant's copyrights in the software, and declarations as to the claimant's entitlement to licence or grant maintenance licences in respect of the defendant's software and damages.

On 19^th December 2008 Ramsey J upon the claimant's application for mandatory interim relief, and the defendant's application for security for costs ordered, alter alia that:

1. The Claimant's and Defendant's solicitors shall use their best endeavours to open a joint bank account with the bank nominated by the Defendant, with all the sums in that account being held to order of the court ("the solicitors joint account")

2. Pending the trial of the claim, the defendant shall from 5^th January 2009 onwards provide the Claimant with a Temporary Password for Set/Turn and/or Documentor for a specific customer ("the customer") within 2 working days of receiving a written request (including email) from the Claimant for a password, provided that the claimant has strictly compled with each of the following conditions:

(1) The Written request specifies:

(a) The name of the customer;

(b) Whether the request is in respect of Set/Turn or Documentor;

(c) The model number, processor group and serial number of the customer's new computer;

(d) The model number, processor group and serial number of the customer's old computer; and

(e) The date of the current annual maintenance licence taken by the customer; and

Thereafter to allow provisions for payment by the claimant.

3. For the purposes of paragraph 2 above, Temporary Password means a password that is set to expire on 30^th April 2009. The Claimant has liberty to apply.

4. Pending the trial of the claim, the Defendant shall from 5^th January 2009 onwards use reasonable endeavours to correct defects in Set/Turn and/or Documentor for a specific customer ("the Defect Customer") following receipt of a written request (including email) from the Claimant, provided that the Claimant has strictly complied with each of the following conditions:

(1) The written request specifies;

(a) The Name of the Defect Customer;

(b) Whether the request is in respect of Set/Turn and/or Documentor;

(c) The model number, processor group and serial number of the Defect Customer's new computer;

(d) The model number, processor group and serial number of the Defect Customer's old computer; and

(e) The date of the current annual maintenance licence taken by the Defect Customer; and

(2) Each of the condition in paragraph 2(2) above; and

(3) The Claimant has by 4pm GMT on 5^th January 2009 provided the Defendant with a temporary password with an expiry date of 30^th April 2009 for the version of Turnover currently residing on the Defendant's system;

Save that the Defendant shall not have to use any endeavours to correct defects that relate to any version of Turnover other than the version residing on the Defendant's system at the date of this order.

5. The Defendant has liberty to apply for sums to be released to it from the solicitors Joint Account.

As to the application for security for costs the sum £40,000 was ordered to cover the period up to and including disclosure.

Schedule A contains the undertakings.

(1) The Claimant undertakes that, if the court later finds that this Order has caused any loss or damage to the Defendant, and the court decides that the Defendant should be compensated for that loss or damage, the Claimant will comply with any order the court may make.

(2) The Claimant undertakes to promptly give the Customer written notification stating that the password is a temporary password provided by the defendant in accordance with this order, and stating that the temporary password will expire on 30^th April 2009.

The injunction has been extended until judgment.

There is also before the court the defendant's application to set aside the injunction on the grounds that when applying for equitable relief the claimants did not come to the court with clean hands because, amongst other matters, of material allegations in their statement of case known to be false and misleading; of failing to provide the court with documents, particularly a distributor agreement between the Claimant and Third Party which was material to the issue of harm and/or irreparable harm if that might be suffered by the Claimant's opposed to the Third Party; and by deliberately misleading the court by asserting that the Claimant was in a precarious financial position and failing to mention the Claimant's financial inter-relationship with the Third Party. The real issues in this case are as to the terms of the agreement between the parties in 2008. The Claimants case is that the terms of a written agreement concluded in 1995 and expiring in 1998 continued to govern their relations by necessary implication or in the absence of agreement based on waiver or estoppel.

The Defendant's accept that some terms formed the basis of the agreement to be implied from the parties conduct as expressly varied thereafter.

1. The Background (Paragraph 1)

2. The 1995 written agreement (Paragraph 40)

3. Dealings post 1998 and the implied terms (Paragraph 130)

4. The 2002 side agreement (Paragraph 118)

5. The May 2008 agreement and events leading to termination (Paragraph 150)

6. The claim: breaches/evidence (Paragraph 199)

7. Agreement 1^st January 2007 between Claimant and Third party (Paragraph 229)

8. Counterclaim breaches/evidence (Paragraph 249)

9. The Application to discharge injunction December 2009 (Paragraph 293)

10. Counterclaim Relief/orders (Paragraph 310)

Background

1. The Claimant is a software company incorporated in the state of New Hampshire in the United States of America. Originally they were a small family company whose shares were principally owned by Paul Schlieben, his wife Joan, Mr Steven Gapp and an employee fund.
2. In September 2006 Unicom Systems, Inc, a company incorporated under the laws of California, USA, purchased the shareholdings outright for US $17m.
3. The Defendant, KDP Software Limited (KDP), is a small software company registered in the United Kingdom whose shares are owned by Kevin Passey and his wife Jane Passey.
4. The dispute between the parties relates to software created by Kevin Passey and his employees and owned by KDP. It can properly be described as middleware because it enables the complex software products used for business management to be used together and to be adapted for an end user's particular business purposes.
5. The hardware used by the end users is the AS/400 processor group and models developed by IBM for general business use from 1980 onwards, which were known as i-series and IBM System i.
6. The AS/400s are multi-processor computers which vary substantially in size, capacity and speed of processors.
7. The operating system for the IBM System i, is only available from IBM and a purchaser of a new machine would purchase the operating system installed.
8. The older versions of the operating system will not run on new machines and the newer would not operate on older machines.
9. Enterprise Resource Planning (ERP) software may be operated in conjunction with the IBM system. The Business Planning and Control System ("BPCS") now owned by Infor Global Solutions ("Infor") is commonly used to control the operations of large manufacturing companies such as pharmaceutical companies. It has different applications of choice which relate to finance and banking, material requirements planning, distribution and manufacturing functions.
10. BPCS is written in a number of programming languages including AS/SET, RPG, SQL and other IBM languages.
11. AS/SET is a programming language and tool. Until 2001 KDP was an AS/SET affiliate and did not pay for a maintenance licence.
12. AS/SET helps programmers to customise BPCS. The end user programmer works on high level definition and objects, and AS/SET generates the low end definition and objects.
13. Programmers use AS/SET to develop their customised software in a development environment. It then needs to be transferred to a test environment and, once tested, to the live environment.
14. The software products relevant to this dispute are TurnOver, SET/TURN and DOCUMENTOR.
15. The Claimant's product, TurnOver, is used to transfer customised programmes from the development environment to the test and live environments. This programme includes the use of AS/SET and other programming languages. TurnOver needs to interface with the different software used by programmers to develop the customised code.
16. The Defendant's SET/TURN is a software programme, a manipulation tool that enables TurnOver to interface with AS/SET. It also has other programmes enabling it to interface with other software, for example SYNON 2e and LANSA.
17. The Defendant's DOCUMENTOR is a cross-referencing/documentation tool and works in conjunction with AS/SET enabling programmers to build documentation directly from AS/SET definitions. It also has enquiry and user defined functions which may be used for calling interface programmes from a list of displayed AS/SET functions.
18. DOCUMENTOR is interoperable with TurnOver and other products through the user defined functions so that an end user may use DOCUMENTOR without having TurnOver or SET/TURN. Thus it may be used in conjunction with those programmes or stand alone.
19. SoftLanding Systems, Inc ("SoftLanding") had been marketing and licensing TurnOver for some years before KDP developed SET/TURN and DOCUMENTOR.
20. The development of SET/TURN significantly enhanced the value and utility of the Claimant's product, TurnOver, because it gave additional functionality to BPCS users wishing to adapt and customise BPCS using AS/SET.
21. The BPCS programmes are complex and expensive, bespeaking very considerable investment by those who purchase them. Large applications may cost millions of dollars. The option to use AS/SET rendered TurnOver more attractive and gave it a wider market.
22. SoftLanding operated worldwide marketing of the TurnOver product before the development of SET/TURN and DOCUMENTOR by KDP.
23. SET/TURN was developed by KDP specifically for use with TurnOver. It took about four years to create and code the software, using AS/SET as the development tool. It was completed in September of 1997.
24. The Defendant's Kevin Passey and the Claimant's Paul Schlieben initially agreed that the Claimant would use its expertise to market SET/TURN, since it was an "add on" to their TurnOver product already in the market and because the Defendant was a software developer and not in the business of sales and marketing of TurnOver or any other change management software.
25. It was agreed that the Claimant would receive 25% of the gross end user price of the SET/TURN licence fee and that the Defendant would receive 75% of the gross end user price as a royalty, reflecting their ownership of the copyright of the SET/TURN programme and the significant cost of its development. The Claimant's of course would derive the commercial benefit from the anticipated additional sales of TurnOver from which the Defendant derived no commission or financial payment.
26. In relation to DOCUMENTOR, which would operate independently of TurnOver and SET/TURN and did not directly serve to promote the sales of the Claimant's TurnOver, the parties agreed a 50% royalty to the Defendant of the end user price if it was sold with SET/TURN, but 75% if it stood alone. It was also orally agreed that the Claimant would have the exclusive right to market DOCUMENTOR to the North American market and the right to sell it worldwide.
27. KDP released a Beta version of SET/TURN and the Claimant licensed the Beta version to Seagram Europe, Esprit, and Smith & Nephew in Australia.
28. With the consent of KDP, SoftLanding also licensed the full release version to 11 end users prior to the parties entering into a written agreement in December of 1995.
29. A great deal of time was taken up in the trial with the genesis of the written agreement of December 1995 and the meaning of its provisions. As to the former, it turned out to be largely a matter of historic and inconsequential importance, since the term of the written agreement was for three years only, expiring in December of 1998. However, an issue in this case is the extent to which the terms of this written agreement by implication continued to govern the relations between the parties thereafter.
30. Mr Onslow for the Claimant has sought to support an application to late-amend his pleading, alleging, inter alia, that the written agreement of December 1995 was one-sided and favoured the Defendant, alleging that it was based on the Defendant's standard terms and contained limitation of liability and indemnity clauses at clauses 11 and 12 respectively that breached provisions of the Unfair Contract Terms Act 1977 ("UCTA").
31. There is no evidential basis to support any such allegation contained in the proposed amended pleading. Mr Onslow submits that Mr and Mrs Passey's account as to the genesis of the agreement some 12 or 13 years ago was so unlikely and implausible that I should reject it.
32. Mr Passey in his evidence said that they never had any standard agreements at the time that the agreement was concluded. The December 1995 agreement was the first distributor agreement that they entered into. Such licence agreements that they afterwards concluded contain provisions that are significantly different as to risk and liability.
33. Mr Paul Schlieben, who is alive and well in New Hampshire, USA, was not called to give evidence. Neither was any Civil Evidence Act application made to contradict the sworn account of Mr Kevin Passey. The agreement was based on one of SoftLanding's distributorship agreements retyped by Mrs Jane Passey and suitably amended to substitute KDP Software Limited as licensor and SoftLanding Systems, Inc as the distributor. Mrs Jane Passey gave evidence before me as to how she retyped the original SoftLanding agreement, suitably adapting it and amending it as the basis of the written agreement between the parties. I have considered the correspondence between the parties at this time and it is clear beyond a doubt that this was a collaborative process conducted by letter and email. The sage contribution of Mr Schlieben is to be found in the drafting of Addendum A and the amendments respectively to paragraph 1 of section 8 and the third paragraph of section 10 of the original draft agreement.
34. I reject the submission that the agreement was a standard agreement drafted and used by the Defendant. I find that the principal source for the draft content of the agreement was furnished by Paul Schlieben and that in any event the agreement concluded was one between the parties with equality of arms.
35. There is no arguable basis upon the evidence that this was a standard agreement or that UCTA has any application.
36. I do not consider that the absence of crisp recollection as to the precise choreography of an agreement 12 years ago in circumstances such as these by Mr and Mrs Passey in any way adversely reflects upon their credit or honesty particularly when the issue has been raised so late in the proceedings, at the commencement of the trial.
37. Having seen and heard Mr and Mrs Passey, I am satisfied that they did their honest best to assist the court as to the genesis of this written agreement.
38. After 6^th December 1998 the three-year period prescribed in the agreement came to an end.
39. Nonetheless the parties continued to deal with each other, SoftLanding continuing to license KDP's software; KDP receiving payments for such licensing and also payments in relation to the maintenance of the end users. That maintenance involved the licensed use of codes generated by KDP's software programme, which enabled both the continued use of the licensed software and backup, by the generation of temporary codes in the event of breakdown of the end users' nominated systems, enabling Disaster Recovery (D.R)

The 1995 Agreement

40. It is important to bear in mind that there are two agreements, in identical terms, which relate to different products: SET/TURN, which supports TurnOver; and DOCUMENTOR, which may be used to support TurnOver but can stand alone.
41. It is also important to bear in mind the commercial context in which the parties concluded the two agreements. These agreements, together with the documents incorporated into them by reference, were not drafted by lawyers. They were the collaborative product of lay businessmen. Both parties accept that they are not agreements that are elegantly drafted, and in so far as it is a main plank of the Claimant's case that the agreement by implication or waiver and estoppel continued to govern the commercial relationship between the parties, subject to express variation until May of 2008, it is necessary to consider the interpretation of the agreements.
42. The relevant parts of the agreements, which are in identical terms for both the SET/TURN and DOCUMENTOR software products, are as follows:-

"2. APPOINTMENT

Subject to the terms and conditions hereof the licensor hereby designates and appoints the distributor for the term of this agreement for the exclusive solicitation of licence and service agreements relating to the Products in the Territory.

3. DISTRIBUTOR

3.1 Distributor agrees, for the term of this Agreement, that it shall use its best endeavours to promote and market the Products to prospective end users by:

1. Identifying prospects within the Territory that may benefit from use of the Products and that are capable of paying the fees required by the licence and this service agreement.

2. Contacting such prospects and conducting presentations of the Products.

3. Performing demonstrations of the Products to prospective end users either on the telephone, on the premises of such end users or at distributors' facilities.

4. Negotiating and obtaining the prospects' execution of license and service agreements hereafter "Licence" (as provided in Exhibit B). Any amendments to the Licence must be approved by the Licensor prior to the execution of Licence by the distributor.

3.2 Distributor shall prepare and submit to Licensor on or before June 30^th and December 31^st of each year a complete and accurate written report of his activities hereunder, including, without limitation, the following:

1. A summary of the nature of contacts made with such end users and Distributor's assessment of the results of such contacts.

2. A listing by identity and date of all licence and service agreements executed by prospective end users and forwarded to Licensor as a result of the Distributor's activities.

3.3 Distributor shall use its best endeavours to generate licence and service agreements executed by end users.

3.4 Distributor agrees that, in consideration of the appointment by Licensor of Distributor as exclusive Distributor for the Products in the Territory, Distributor shall not during the term of this Agreement represent or offer to represent or market, sell or distribute, in the Territory, computer software products that compete directly or indirectly with the Products.

3.5 Distributor agrees to use best endeavours to protect the Product and not to cause or permit anything which may damage or endanger the Product or the Licensor's title to it or assist or allow others to do so and to take all reasonable action as the Licensor may direct at the expense of the Distributor in relation to any such infringement.

3.6 Distributor shall not make any alteration to the Product or permit others to do so without the consent in writing of the Licensor.

4. DEMONSTRATION RIGHTS

Licensor hereby grants Distributor a personal non-exclusive non-transferable licence to use during the term of this Agreement two "Demonstration Copies" of a Product for the purposes of demonstrating the Product to prospective end users in connection with marketing activities. Distributor shall use the Demonstration Copies for making demonstrations to prospective end users (1) on computer systems owned or leased by the Distributor or (2) on the computer system of the prospective end user. In each case, (1) Distributor shall control and limit the use of Products for the specific purpose authorised by issuing authorisation codes to enable the Product to work on a prospective's computer for a limited time during the prospective's trial period and (2) upon completion of the demonstration, remove or disable the Product from end user's computer. Distributor acknowledges that the Products, including any intellectual property rights pertaining thereto, are owned by the Licensor and represent or contain valuable copyright and trade secrets of the Licensor. Distributor shall protect the Products from unauthorised copying, dissemination, or disclosure and other unauthorised use.

5. AUTHORITY OF DISTRIBUTOR

Distributor has and may exercise no authority to make statements or representations concerning the Products that exceed or are inconsistent with the marketing materials and technical specification provided to Distributor by Licensor. Distributor has and may exercise no authority to bind Licensor to agreement, undertaking or performance whatsoever and undertakes not to describe itself as the agent or representative of the Licensor, nor to pledge the credit of the Licensor in any way.

6. ANCILLARY SERVICES

6.1 Distributor is authorised to offer directly to any end users, independent of its functions as Distributor under this Agreement, appropriate ancillary services in support of the Products. Such services include without limitation, the following:

1. Assistance with the installation of the Products on end users' computers.

2. Technical training of end users' personnel at end users' or Distributor's facilities.

3. Provision of telephone hotline service and consulting support to end users with respect to the functions and operations of the Products.

4. With Licensor's approval Distributor may modify the Products for the benefit of end users, in the course of providing support, or otherwise.

6.2 The terms, conditions and charges for such ancillary services shall be established by Distributor with end users.

7. UNDERTAKING OF LICENSOR

The Licensor shall provide technical support and ongoing development in order to keep the software viable and current and the Licensor shall have the right to make such changes in the Product as the Licensor shall in absolute discretion think fit.

8. PRODUCT PRICING

8.1 75% of the gross price obtained by the Distributor from each end user for the Product with a minimum of $5,000.

8.2 Amounts payable to Licensor shall not be subject to credit in favour of Distributor for any amount previously paid to Licensor with respect to revenues that are refunded by Distributor to end users.

8.3 Distributor shall be responsible for its own expenses and costs under this Agreement, and Licensor shall have no obligation to reimburse Distributor for any expenses or costs incurred by Distributor in the performance of Distributor's duties hereunder.

8.4 Licensor shall be responsible for its own expenses and costs under this Agreement, and Distributor shall have no obligation to reimburse Licensor for any expenses or costs incurred by the Licensor in the performance of Licensor's duties hereunder.

9. TERRITORY

The territory of this Agreement shall be all nations.

10. TERM AND TERMINATION

10.1 The term of this Agreement shall commence upon the date of execution of this Agreement and shall continue for three (3) years thereafter unless sooner terminated in accordance with the provisions hereof.

This Agreement may thereafter be extended only by written instrument executed by both parties.

10.2 Licensor may terminate this Agreement upon written notice to the Distributor in the event of the breach of any material obligation hereunder by Distributor that is not cured by Distributor after receipt from Licensor of fourteen days' written notice calling attention to such breach and demanding cure thereof.

10.3 Either party may terminate this Agreement for such party's own convenience and such party's own discretion upon six (6) months' prior written notice to the other party.

10.4 Upon termination of this Agreement by:

(a) The Licensor by exercising its options as defined in section 10.3, Distributor may continue to license support the Product. The Licensor shall provide Distributor with source code for the Product, to be used only for the express purpose of continuing to support its customers. In the event that Licensor sells the rights to the Product to a third party, and that third party agrees to provide services equivalent to those provided by the Licensor, then the Distributor shall return the source, along with any changes it has made to the source, to the Licensor. In the event that the Licensor ceases doing business and fails to make an assignment of the Product to a third party prior to termination proceedings, then, the Licensor shall deliver to the Distributor all materials, including but not limited to, source code, objects and related documentation, relating to the Product, and will transfer all rights and ownership of the Product to the Distributor.

(b) The Licensor for breach of any material obligations as defined in section 10.2, or Distributor for any reason, Distributor shall within fourteen days of such termination return to the Licensor all copies of the Products including the Demonstration Copies and all materials, including but not limited to, copies of technical materials, brochures, marketing materials. Distributor shall further provide the Licensor copies of Distributor's prospect files and end user correspondence files.

11. INDEMNITIES

Distributor hereby indemnifies Licensor from and against any and all claims, demands or actions arising out of Distributor's activities or performance outside the express authorisation provided Distributor under this Agreement or any breach of Distributor's obligations hereunder.

12. LIMITATIONS OF LIABILITY

In no event shall either party hereto be entitled to special, indirect or consequential damages, including loss of profits for breach of this Agreement. Remedy shall be limited to claims for amounts due hereunder or for indemnification as provided for herein. However, the forgoing limitation of remedies shall not apply to any action by Licensor for infringement by Distributor, any action based on or with respect to unauthorised publication, disclosure or use of confidential information or trade secrets of Licensor; or any action based on Licensor's rights and copyrights, trade marks, or trade names or other proprietary rights in the Products.

13. TRADEMARK

Except for the purposes of identification of Products, no right, title, interests, or licence in or to any trademark or service mark to Licensor is granted to Distributor under this Agreement. Distributor may on no account state that Distributor is an authorised agent for the licensing of the Products of the Licensor.

14. STATUS OF DISTRIBUTOR'S PERSONNEL

The parties to this Agreement are and shall remain independent contractors, and nothing herein shall be construed to create a partnership, joint venture or agency agreement between the Licensor and Distributor.

15. NOTICES

All notices, demands or consents required or permitted under this Agreement shall be in writing and shall be delivered personally or sent by certified or registered mail to the appropriate party at the address set forth in the first paragraph of this Agreement or at such other address as shall be given by either party to the other in writing.

16. CHOICE OF LAW

This Agreement shall be deemed to be made in England and in all respects shall be interpreted, construed and governed by and in accordance with the laws of England and Wales.

17. WAIVER OF RIGHTS

The waiver by either party of any term or provision of this Agreement shall not be deemed to constitute a continuing waiver thereof nor of any further or additional rights such party may hold under this Agreement.

18. NO ASSIGNMENT; ENFORCEABILITY

This Agreement is personal to Distributor and is not assignable without the prior written consent of Licensor. Any attempt to assign or transfer or sub-distribute any of the rights, duties or obligations of this Agreement without consent is void. If any provision or provisions of this Agreement shall be held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby."

43. It will be seen that clause 3.1.4 refers to the licence as provided in Exhibit B. This prescribes the terms of the software licence that may be granted by SoftLanding. It cannot be amended without the prior consent of the Licensor. The licence granted is a non-transferable and non-exclusive licence for use in perpetuity in relation to specified hardware at specified locations. Exhibit B also contains the following terms:

"Alternate Installations

In the event that a designated computer (see addendum A) is destroyed or replaced, SLS shall Deliver a substitute copy of the System, to the Customer's central location, within 72 hours of notification by the Customer.

Maintenance

A. SLS agrees to offer maintenance for one (1) year periods by submitting an invoice (in accordance with this Agreement) not less than 60 days prior to termination of the existing maintenance period. Customers may purchase maintenance offered by SLS for one year periods by notifying SLS and prepaying SLS the then current annual price for such maintenance, at least thirty (30) days prior to the date each such one year maintenance period is to start.

B. SLS maintenance duties are only:

(i) to correct any defects, including software bugs, in the System Programs which cause the System Programs not to operate in accordance with the description of the Systems function in the documentation.

(ii) to provide reasonable written and telephone consultation pertaining to operation and application of the System.

(iii) to provide modifications to the System Programs which are designated by SLS as "internal improvements" definition herein, (Modifications and/or enhancements to the Systems routines that are made available, at no additional licence fee, to customers whose System maintenance payments are current) and is made generally available to other customers at no additional licence fee. Customer agrees to install such modification or internal improvement within 45 days of receipt.

(iv) to provide updates to the System documentation within 30 days of the date updates to System are made available to customer."

44. The SoftLanding maintenance obligations are in part dependent upon SoftLanding's access to the relevant source codes retained by KDP.
45. Clause 7 of the main agreement provides that KDP has the obligation to provide the technical and consultancy support described in (i) to (iii) of the licence agreement. The agreements are the collaborative product of laymen who are businessmen in the software industry and are not well drafted. The proper approach to the interpretation of such documents as these is in accordance with the classic guidance set out in the speech of Lord Hoffmann in ICS Limited v West Bromwich BS [1998] 1WLR page 896 at page 912, paragraphs F to 913 paragraph E:

""My Lords, I will say at once that I prefer the approach of the judge. But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v Simmonds [1971] 1WLR page 1381, 1384-1386 and Reardon Smithline Limited v Yngvar Hansen-Tangen D [1976] 1WLR 989, is always sufficiently appreciated. The result has been subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of "legal" interpretation has been discarded. The principles may be summarised as follows.

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation at which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact" but this phrase is, if anything, an understated description of what the background may include subject to the requirements that it should be reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some ways unclear. But this is not the occasion on which to explore them."

46. The commercial context in which the parties concluded the two agreements is important. Neither party would know how marketable or what the demand for the KDP products SET/TURN and DOCUMENTOR would be. It was to a degree a "wait and see" project.
47. SET/TURN and DOCUMENTOR had been written by KDP at its expense and risk. SET/TURN, which does not operate independently of TurnOver, adds functionality to TurnOver, enabling users to manipulate AS/SET code within BPCS, making TurnOver a more attractive product.
48. Whilst DOCUMENTOR could function independently, SoftLanding's other products, SET/TURN, DOCUMENTOR and TurnOver, were essentially specialist products for use by software engineers working for a small number of large businesses.
49. SoftLanding had an established marketing team worldwide engaged in the promotion and sale of TurnOver. They had the marketing expertise and it made sense for them to be given free rein to exploit the products SET/TURN and DOCUMENTOR worldwide on an exclusive basis for a finite term, together with the right to issue software licences to end users and to conclude maintenance agreements necessarily using KDP's source code at whatever price they judged the market would stand, for the mutual benefit of both SoftLanding and KDP.
50. Specialist software such as TurnOver, SET/TURN and DOCUMENTOR often have minor defects which manifest themselves in the earlier life of software but do not prevent the software from being marketed, but which require correction and support. There is also a need for end users to have access to technical support, enabling them to configure and use SET/TURN and DOCUMENTOR correctly. It is not financially viable for software providers to enable such support to be given free of charge or even to continue to trade without the income from those maintenance fees.
51. It is the access to the source code from which the software is compiled that makes it possible to correct minor defects. With access to the source codes, any confident programmer could correct such defects.
52. The exclusive access to the source code is essential to protect a specialist software provider's revenue stream.
53. Computer technology advances as time passes, sometimes so radically that the facility to use the existing software or hardware is lost. The loss of such facilities may justify the substantial alteration to existing software to function with new hardware or even to warrant the complete rewriting of software to be compliant with other updated software.
54. An unlimited obligation to provide modifications or to rewrite so that software should work on more advanced and ever-changing hardware I accept would be so onerous that it would not make commercial common sense, particularly in relation to these middleware products. It would require AS/SET and BPCS to be maintained and supported indefinitely despite the demand for such middleware at the time of the agreements being an unknown, and the risk primarily falling upon the software provider, who is not in a position to judge the market.
55. In the market conditions of the time both parties must have recognised that for a software product to be marketable it had to have some reasonable level of technical support for the end user, to ensure its utility during the life of the software when used with the nominated hardware. Depending on the economics of hardware replacement, advances in computer technology and obsolescence, that could be a short time or a relatively longer time. Both parties would have appreciated that to make sensible provision for the support of the end user was not altruistic but founded on good commercial sense. A supported product would be more marketable and commercially attractive and, if correctly priced, would yield a revenue stream to the service provider.
56. As products may change, so may service providers and so may the owners of such copyright and other rights in software programmes.
57. There are a number of themes that are reflected in the structure of each of the agreements and the incorporated provisions of Addendum A and Exhibit B.
58. Firstly, the solicitation of licence and service agreements for SET/TURN and DOCUMENTOR worldwide (clause 2), coupled with the active marketing and negotiation of licences (clause 3). Second the recognition and the protection of KDP's ownership of the sole rights, including the copyright of both of the software products, exemplified in the restriction to licence (clause 3.4); prohibition against unauthorised alterations to the product (clause 3.6), protection of intellectual property rights (clause 4), representations concerning the product (clause 5) and prohibition against unapproved modifications (clause 6.1.4).
59. In return SoftLanding is given the exclusive right to license and sell the products SET/TURN and DOCUMENTOR worldwide for three years and under clause 8 a percentage of the licence royalties with an unfettered discretion to fix charges for both licences and maintenance agreements. Furthermore, under clause 6 SoftLanding may enter into ancillary support and maintenance agreements, as is provided for in Exhibit B under the heading 'Maintenance'. The right to enter into maintenance and service agreements is a valuable right providing a revenue stream during the life of the agreement. The provisions in the maintenance agreement, in the event of destruction or loss of either software or hardware, and exact replacement, necessarily assume access to the source codes. Clause 6.1.4 envisages KDP's involvement, should modification be approved, and clause 7 underpins the necessary access to source codes in the maintenance agreement under the heading "alternate installations". There is no absolute prohibition against assignment in the agreements. Clause 18 provides that whilst the agreement is personal to SoftLanding, it is capable of assignment with the prior written consent of KDP. So far as KDP is concerned, clause 10.4 expressly deals with sale of the rights to the product to a third party.

Software maintenance obligations under the agreement

60. The licence granted under the written agreement in relation to the software for both SET/TURN and DOCUMENTOR is a perpetual licence. It is to be distinguished from the annual maintenance support provided for under Exhibit B. This support includes an entitlement to a duplicate copy licence of the software with recourse to the source codes in the event of disaster recovery (D.R) as when the hardware is irreparably damaged or destroyed and the software lost. There is a dispute as to the extent of this obligation under the agreement. The agreement, which ran for three years, expired on 6^th December 1998. Maintenance agreements clearly could have been issued in the form of Exhibit B until just before the previous annual licence expiry date and would subsist until almost one year after the expiry of the annual maintenance agreement. Clearly, under the agreement the Defendant by virtue of clause 7 and the provisions of clause 3.4 (as amended) agreed to give the appropriate support for the events and requirements set out in Appendix B under the heading "alternate installations" and "maintenance".
61. Mr Onslow submits that clause 7 imposes upon the Defendant an obligation unlimited in time to support the end users' software in relation to its original licensed version and original nominated hardware.
62. In the event of a failure or refusal to give such support, by way of example by not giving access to source codes, he submits that the Defendant would be in breach of the clause 7 undertaking to "provide technical support and ongoing development in order to keep the software viable" and that such failure or refusal under clause 10.3 is a termination of the agreement for the Defendant's convenience and gives the Claimant a right to possession of the source code for the purpose of supporting the end users. Alternatively he submits that a failure to provide source codes would be a cessation of business which, coupled with a failure to assign the rights in the software product to a third party, would "give all rights of ownership of the products … to the distributor", that is, SoftLanding.
63. Firstly, clause 10, entitled "Term and termination" must be read as a whole. Under clause 10(1), after three years both parties may well walk away from the agreement subject to any separate legacy maintenance obligation to end users there may be.
64. During the three-year term of the agreement both parties may walk away from the arrangement for convenience (10.3) on giving six months notice to the other party.
65. Should KDP drop out for convenience, SoftLanding would become entitled to access to the source code to support existing customers. SoftLanding would continue to have the right to license the product.
66. Should KDP sell the product to a third party and the third party agree to provide equivalent support services, then the source code would be returned to KDP. The distributor's bargain, that is, exclusive worldwide rights to license the product and to maintain the product, continues for the duration of the term of the contract.
67. The expression "ceases doing business" in this context clearly envisages circumstances such as insolvency, receivership or liquidation whereby the software business ceases to operate and there is no access to the codes. In those circumstances, where there is no access to the codes, the term "business" should be construed to read "relevant business", such as that of supporting the maintenance of the software. In such circumstances, to preserve the distributor's bargain of 3 years exclusivity he becomes entitled to the rights and ownerships of the products; he has not been protected by notice and given possession of the support codes. Neither in the event of termination for convenience, has he the assurance, as he would in the event of sale, that the product would be supported by the third party purchaser.
68. The Claimant contends and seeks to support an amendment to its Particulars of Claim that clause 10.4 continues as an implied term and that there has been a refusal of a source code which constitutes a cessation of business, giving rise to SoftLanding's entitlement to not only the source code but the ownership of the software, SET/TURN. Mr Onslow contends that the obligation to provide source codes and to keep the software viable and current comprehended in the undertaking in clause 7 of the agreement continues and is perpetual. It cannot be sensibly maintained that these software-knowledgeable businessmen, following the end of a fixed term three-year agreement, intended to agree provisions comprehending significant changes to hardware and software with unknown cost implications without limit of time.
69. Had that been the case, then clear language imposing such maintenance and support obligations would have been used, as it was in Harbinger (UK) Limited v GE Information Systems [2001] All ER (Comm) page 166. The appellants GEIS were computer network operators providing services enabling their customers to send business communications rapidly and securely. They provided software packages obtained from Harbinger (UK) Limited.
70. Under an agreement of 19^th August 1996 between GEIS and Atlas Products International Limited, Atlas manufactured software product Atlas EDI and undertook to supply it to GEIS's customers and license its use to GEIS and end users to whom GEIS was authorised to grant sub-licences. Model end user agreements were scheduled to the agreement. Harbinger Corporation acquired Atlas in 1997. On 30^th December 1998 Harbinger gave written notice terminating the agreement from 31^st December 1999. The issues raised in the appeals were whether the respondent remained liable to provide support and maintenance for the Atlas EDI software after termination of the agreement and if so for how long. The relevant clause in the agreement was clause 10, which provided:-

"Clause 10 – support and maintenance

API will provide support and maintenance in perpetuity in return for an annual payment specified in Schedule One and subject to the following conditions … "

The subject of the cross appeal was: does clause 10 survive termination of the agreement?

71. At paragraph 19 by Evans LJ: said:

"Thus in my view clause 10 has the effect contended for by the appellants in their alternative submission. The respondent's obligation continues until the appellants and their customers no longer require and are willing to pay for the support and maintenance services. Mr Barnes submits that this is a wholly uncommercial reading of the clause because the number of customers requiring the service may dwindle even to one, yet the respondent will be obliged to maintain the service facility for even one. I can see that this might become uneconomical for the respondents but it is not the whole picture and this fact alone does not make the interpretation uncommercial. As any user of electronic equipment knows, an undertaking to provide after sales service for an extended period can be strong inducement to buy, and the commercial value to Atlas/Harbinger of promising support for an indefinite period as a standard term of their sales package must have been very great. In those circumstances they are not released from their undertaking merely because it may become uneconomical for them to perform it. Moreover the risk must have been apparent when the agreement was made. In the event I wonder how unlikely it is, given the nature of the goods in question, that there will in fact be a continuing long term demand for support and maintenance of the software package which is now out of production and must, if it is not already, become obsolescent."

The court held that the express words "in perpetuity" are inconsistent with any time limit on the operation of the clause.

72. Paragraph 20:-

"The question of whether the clause 10 contract is terminable on reasonable notice is a separate issue. Reference is made to the judgment in Staffordshire Health Authority v Staffordshire Water Works Company [1978] 1 WLR 1387. There the obligation was to supply water at all times hereafter under an agreement dated 30 July 1929 at a price which by 1971 had become only 1/20 of the current water rate. The Court of Appeal held that the agreement could be determined on reasonable notice. The words quoted were capable of meaning at all times hereafter during subsistence of this agreement and that they did not conclusively and inevitably declare perpetuity. They therefore did not have the effect that the agreement was intended to persist in perpetuity, as the trial judge had held that it did. The difference between that case and the present in my judgment is that the words in perpetuity are sufficient to exclude the implication in the circumstances of this case that the extended contract provided for by clause 10 is terminable by Atlas/Harbinger on reasonable notice."

73. I reject the submission of Mr Onslow that, by permitting SoftLanding to enter into annual maintenance licences supporting a perpetual software licence, KDP have to provide such support in perpetuity and that KDP and no other had to provide such support. Under the licence provisions of Exhibit B there is no restraint upon SoftLanding assigning its rights and obligations under the maintenance agreement to somebody else. It could make commercial sense to assign it to KDP or some other software management house because the charges to the end user are not limited under the agreement and the end user cannot assign its rights under Exhibit B. Even during the 3 year currency of the original agreement KDP, provided it made commercial sense, could have assigned its rights in the software products to a third party or agreed to sell its rights to SoftLanding.
74. Post December 1998 had SoftLanding exercised its rights under clause 10.3 for convenience to walk away from the agreement with KDP, having given any appropriate notice, it could have discharged its existing maintenance obligations to end users in a variety of commercially viable ways such as assignment to KDP or third parties. These were not parties locked together in perpetuity because the original software licences were in fact perpetual licenses to the end users.

The level of maintenance support

75. The level of maintenance support provided for in clause 7 was to provide technical support and ongoing development in order to keep the software products viable: that is, the products described in the schedules to each of the agreements.
76. The original parties to these agreements would have been knowledgeable as to any changes and developments current in their parts of the software industry, particularly as to AS/SET, BPCS and TurnOver and in respect of SET/TURN. Significant changes in such systems as AS/SET and BPCS have a reasonably long gestation. Were there any significant changes in their contemplation within the next three years, they doubtless would have been reflected in the express provisions of the agreement.
77. By way of example, such version changes as in fact occurred to AS/SET in 2000 whereby an expensive and time consuming programme upgrade was not within these provisions. These provisions comprehended small incremental internal changes and the support necessary to keep the original versions of SET/TURN viable and technically compatible with the original hardware and authorised substitutes. The duration of the support undertaken was for the term of the agreement. For the avoidance of doubt this included the maintenance licences which were current by the time of expiry. To be current, a maintenance licence had to be a paid up annual licence in accordance with the maintenance provisions of Exhibit B, namely paid up at least 30 days before the expiration of the previous term, and had been prepaid by SoftLanding to KDP at the rate of 75% of the gross maintenance fee received by SoftLanding prior to the expiry of the year's maintenance.

Royalties

78. The royalties payable under the agreements are set out as to SET/TURN and DOCUMENTOR at clause 8 of the respective agreements. For SET/TURN 75% of the gross price obtained by the distributor from each end user with a minimum of $5,000. That it was gross was made doubly clear by the addition of the provisions of clause 8.3:-

"The Distributor shall be responsible for all expenses and costs under the Agreement and the Licensor shall have no obligation to reimburse the Distributor for any expenses incurred by the Distributor in the performance of the Distributor's duties hereunder."

79. As to DOCUMENTOR, there were similar provisions, save that this could be used independently of Turn/Over and was a stand alone product. If it was sold with Turn/Over, SoftLanding charged 50% of the gross end user price. These provisions reflected the oral agreement concluded before the written agreement.
80. In relation to the maintenance royalty, it was agreed that KDP should be paid 15% of the gross sum received by the Claimant. The Claimant's case as to royalty payments is that the implied continuation of clause 8 came to an end in 2000. A disproportionate amount of time was occupied during the trial by evidence adduced by the Claimant in support of a case that the parties, in or about 2000, agreed to substitute fixed payments representing royalties for both SET/TURN and DOCUMENTOR instead of the percentage basis adopted prior to the written agreement and provided for in clause 8 of the agreement.
81. Disclosure shows that, had the Defendant so agreed and if the commercial realities of pricing were known to both parties, it would indicate that the Defendant was content to accept a reduction in their future royalty income.
82. SoftLanding did not adduce any evidence from Mr Schlieben a party to this alleged agreement. There was no evidence to support such an agreement or to contradict the oral sworn evidence of the Defendant.
83. The evidence of Alison Bergeron, the Softlanding accounts officer responsible for payments, was not before the court because she was unwilling, for whatever reason, to cooperate with the Claimant.
84. The Claimant was initially content to rely upon documentary evidence showing that royalty payments had reached a plateau and was uniform for some years. Their case changed when the Claimant in submission asserted that Mr and Mrs Passey were not credible or honest witnesses because they denied the alleged fixed price agreement. The Claimant asserted that the Passeys dishonestly sought to support their counterclaim for alleged underpayments of royalties by SoftLanding, which depended upon a percentage royalty basis of assessment, by denying the fiction of an agreement to fix royalty fees. It was an allegation of dishonesty not pleaded and in my judgment wholly without foundation.
85. The original pleading alleged that by agreement fees paid to KDP in respect of maintenance became uniform, it was only later that it was alleged that there was a fixed rate agreement in respect of licence royalty payments and maintenance then finally that the parties had agreed that licence fees for both SET/TURN and DOCUMENTOR, and maintenance fees revert to a percentage basis.
86. Mr and Mrs Passey both gave evidence that was tested in a rigorous and fair way by Mr Onslow. Mr Passey was cross-examined over several days. Mr Passey struck me throughout as a witness who was frank and candid and did his best to recollect events over many years in a fair and considered way. His skills are as a programmer. He readily accepted that in relation to sales and marketing he was no match for Mr Schlieben and it is evident that in such matters as marketing and pricing he deferred to him.
87. The administration of KDP, a small family company, was the province of Mrs Jane Passey, who struck me as a careful witness whose role in business was that of book-keeping and chasing of payments. Transatlantic communication with SoftLanding was by fax and telephone and later by email. The Schiebens and Passeys had met once in 1994/95. The Passeys had a friendship with Mr Gapp, a SoftLanding shareholder, which originally was close but over the years had evaporated.
88. The receipts of royalties between 2001 and 2007 were uniform in amount. The Passeys' belief was that they represented the agreed percentages under the agreement of the gross end user prices, save when they were less, reflecting discounts under the authority of the agreement. In the early days, post agreement, the Passeys continued to receive details of the end user transactions. Later, this practice fell off.
89. They also received some of the price lists whereby they could judge their receipts against the end user charges.
90. Later, SoftLanding neglected to send current price lists to KDP. It is evident that neither Mr Passey nor Mrs Passey actively sought information as to pricing or receipts from the end users from SoftLanding and were content to receive what they perceived their due under the agreed arrangements with SoftLanding.
91. It is clear that both Mr and Mrs Passey were genuinely shocked and distressed when they learned of the actual prices charged by SoftLanding and the level of their receipts from the end users. They gave evidence of having trusted Mr and Mrs Schlieben to honestly account and remit royalties based upon the gross end user prices. I accept that they did give such trust and in so doing exhibited the level of their commercial naivety. That their trust was misplaced as to the relationship with the Schleibens is demonstrated when Mr Schleiben and Mr Gapp sold out to Unicom on 28^th September 2006. Neither bothered to inform the Passeys of the sell-out. I accept the evidence of Mr Passey that during the period during which uniform fees were being received he was also engaged on other time-consuming projects and that whilst Mrs Passey continued to administer the company she was to a degree preoccupied with ill health following six IVF treatments and the removal of a suspected cancerous ovary. This was not the major part of KDP's software business.
92. Mr Onslow submits that since the royalties between 2000 and 2008 were uniform, they must have been fixed fees, and he relies upon an interchange of emails and correspondence between KDP and SoftLanding in the spring of 2007 to support his hypothesis that the Passeys agreed this to be the case. On 16^th February 2007 Mr Neil Watt of Unicom wrote:-

"Dear Ms Passey

I have been encouraged by SoftLanding's Alison Bergeron to contact you re the status of royalties payable to KDP.

Per Alison's recent analysis although we've accrued royalties to KDP to date there is only about 1200 (USD) owing. We intend to process this in the next few working days.

I have not been able to get from Alison a copy of the executed contract that supports the current rates payable to KDP by SoftLanding, perhaps dating back to 1999.

Could you perhaps email a copy of this most recent amendment setting out the current rates, that would be much appreciated.

Neil Watt"

93. His reference to the current rates payable to KDP going back to 1999 has resonance in so far as a price list at that period showed licence fees for SET/TURN as $7,500.
94. On 18^th February 2007 Mr Passey replied:-

"Further to your recent email to Jane, firstly the reason you cannot get a contract from Alison which supports the current rate is because there isn't one. We had an original agreement for the development of SET/TURN back in 1995 which has informally changed over the years to the point where we now receive the following royalties:

SET/TURN licence plus first years maintenance $6,469

SET/TURN AND DOCUMENTOR licence plus first year's maintenance $8,419

SET/TURN maintenance 1 year $844

SET/TURN AND DOCUMENTOR maintenance 1 year $1,294

The end user pricing is pretty much left to SoftLanding as SET/TURN basically sells TurnOver to BPCS clients and some of these deals could be quite complicated."

95. It is to be noted that $6,469 comprises 75% of $7,500, $5,625 and $844. $7500 was the sum which both Mr and Mrs Passey deposed was the sum they believed was the gross sum received from the end user, and $844 represented 75% of the gross end user maintenance fee that was charged by SoftLanding. Mr Neil Watt, the recipient of this letter, told the court that he understood the letter to mean that maintenance only was being paid at a flat rate and that as to the licence it was a little ambiguous because it could reflect a set price for the licence, 75% of which could result in these rates which appeared to be flat rates. The price of the licence was of course set by SoftLanding:-

"… we could have a set price which x 75% always yields these flat rates for licences. So the distinction between a rate and a licence could be the distinction between half-a-dozen and six."

96. Of course the same considerations apply to maintenance fees because $844 is a percentage of the maintenance fee which, if SoftLanding has a uniform price, gives a uniform percentage royalty to KDP.
97. By 22^nd March 2007 Mr Watt acknowledged that he had received a copy of the original agreement from Mrs Passey and so could be under no illusion as to the original basis of charging for both licence and maintenance. He wrote:-

"Dear Jane

The wire is in process at $6,469.

For future reference I need to know how we get to $6,469.

You have forwarded me a contract that sets the licence at the greater of $5,000 or 75% of the gross.

$6,469 is based on a rate that is greater than either of these amounts."

98. The $6,469 is 75% of the licence charge of $7,500 shown in the price list and the last price list vouchsafed to KDP by SoftLanding and the maintenance royalty. Mrs Passey said, and I accept, that prior to the email above she was telephoned by Mr Watt in France about a transaction with Belden which he sought to undo in order to increase the price to them and which later he decided not to unwind. Mrs Passey said then that she assumed that the price would revert to the $7,500 charge to the end user, of which 75% was $6,469.
99. Mrs Passey's email of 22^nd March 2007 confirmed her understanding that SoftLanding under the agreement had complete discretion as to pricing and that she had no idea what the current price level to the end user was, save her assumed knowledge of the end user price based on the last price list.
100. It is curious that, following the careful due diligence that must have been performed by Mr Watt and his two legal associates, SoftLanding and Unicom were not already in possession of the copy agreement, the payment records and any account that Mr Schlieben may have chosen to give as to the commercial relationship between KDP and SoftLanding.
101. The emails sent by Mrs Passey and the letter of 18^th February 2007 are wholly consistent with their tested sworn evidence that they did not agree to accept fixed payments in substitution for percentage royalties for either SET/TURN and DOCUMENTOR or the maintenance fee.
102. It is of significance that in 2002 when Mr Schlieben was discussing with Mr Passey by email the funding of a proposed new version of SET/TURN compatible with the v8 version of AS/SET, Mr Schleiben dismissed Mr Passey's suggestion that an upgrade fee be charged for year one, to be kept by SoftLanding, but said that he would consider raising the maintenance fee for 2002 by some reasonable limit. Such a suggestion giving benefit to both makes no sense, had there been an agreed fixing of royalties two years earlier.
103. I reject the submission that Mr Schleiben and Mr Passey agreed to fix royalties. I do not derive any assistance from the late disclosed email of Ms Bergeron or the late disclosed minutes of the internal meeting which Mr Zurich attended and of which he professes no recollection. There is no cogent commercial reason why KDP should have agreed fixed royalties and nonetheless have given discounts on such fixed royalties as the records show they did on the payments that they received. I am driven to conclude that the elaborate case as to a fixed fee Royalty was pursued by SoftLanding to explain in part under payments of licence fees and maintenance fees.

Maintenance payments

104. I am satisfied that prior to Unicom's takeover in September of 2006 there were regular royalty payments in respect of both the licensed user of software and the maintenance fees. There had been a good working relationship between Mrs Passey and Alison Bergeron of SoftLanding and information was exchanged between them as to the need to issue timely reminders to end users who would renew their annual maintenance. Where renewal was late, temporary codes only were issued by KDP, expiring within 30 days, to enable payment to be chased up by SoftLanding. KDP were informed by SoftLanding as to the status of end users who would require maintenance and KDP was able where appropriate to give the appropriate period of grace and temporary codes. I am satisfied that KDP did not as a matter of course permit deviation from the terms originally laid down in Exhibit B under the rubric 'maintenance'. I am satisfied that royalty payments were regularly remitted by wire by SoftLanding, monthly where appropriate, and this reflected the pattern established by the original agreement and which by conduct the parties agreed to adhere to.
105. On 26^th January 2007 Mrs Passey was informed that a maintenance royalty in respect of Maple Leaf Foods would be paid by Unicom and not SoftLanding.
106. On 27^th January 2007 Mrs Passey expressed her concern to Alison Bergeron of SoftLanding saying that she didn't understand why Unicom was being paid for SET/TURN and said that she assumed that end users who had not paid their renewals would be removed from the list, noting that some were more than two months out of date.
107. Not all software licensees renewed their annual maintenance. The software technology was ageing and tested and thus reliable and the earlier bugs had been ironed out. Some users had adopted different systems rendering their software redundant.
108. I am satisfied that both parties adhered to the payment provisions originally set out in the written agreement until September 2006 when Unicom purchased SoftLanding.
109. They ensured a necessary part of the income for KDP. They sanctioned no general deviation from those provisions, ensuring the timeous prepayment by the end user and timeous payment of the licence fee royalty to KDP.

The alleged varied payment agreements of February/May 2007

110. The Claimants' case is that the previous payment provisions were varied by agreement between the parties.
111. In August 2009 Mr Neil Watt of Unicom in his first sworn account said:

"Having found out from Mr Passey the current position between the parties in relation to rates I had to deal with the practicalities of making payments to KDP. I discovered that previously payments of fees were made to KDP as and when they were received from the end user, which resulted in payments being made on a monthly or even more regular basis. This is clearly uneconomical from a clerical point of view. Accordingly I agreed with Mr Passey that KDP would be paid quarterly from that point onwards. I do not recall the exact date of the agreement but believe it was reached in a phone call in early 2007.

I also agreed (I believe in the same phone call) that SoftLanding's fees for all maintenance transactions would revert to 75% and 50% of the receipts for SET/TURN and DOCUMENTOR respectively…."

112. In his oral evidence he changed this account, saying that he had seen the payment records for the last ten months of 2007, which show that payments continued to be paid by Unicom to KDP monthly.
113. He also changed his account as to his discussion with Mr Passey in the same telephone conversation in relation to royalties. He said that that conversation was on 9^th May 2009 and "… Mr Passey told me the rates for maintenance for SET/TURN and DOCUMENTOR were 75% and 50% and for the expediency of our business I went along with that"
114. Mr Passey consistently in his written and oral evidence has deposed that there was no such agreement to pay quarterly. There was no commercial reason for him to accept such an interruption to his company's cash flow. It clearly does not accord with SoftLanding's administrative necessity either, because payments continued to be paid by SoftLanding monthly, as before September 2006, by and large they had. There is nothing in the contemporary documentation that supports such an account. I accept Mr Passey's evidence that there was no such agreement. I reject Mr Watt's evidence as to an agreement as to quarterly payments.
115. On 15^th February 2009 in the Claimant' responses to a Part 18 request it was alleged that there was an oral agreement, in a telephone call with Mr Passey in February 2007, to change the basis of the royalty payment from a fixed fee to a percentage in relation to maintenance.
116. Mr Watt in his oral evidence changed his account as to the February conversation about the maintenance royalty and represented the conversation as an agreement in May of 2007 to change the flat payment maintenance fee to a royalty based on the calculated percentage. I reject that evidence. There was no such agreement. I accept the evidence of Mr Passey that there was an insistence by him that the percentage basis had always been the way in which royalties were calculated for both the software licence and the maintenance fee, and that this was accepted by Mr Watt.
117. The motive for Mr Watt promoting the version of events that payments were agreed to be quarterly and not monthly, and that a fresh basis for royalty payments was agreed, would explain and justify both late payments by SoftLanding to KDP late in 2007 to 2008 and serve to reconcile payment records with the Claimant's unsupported case of a fixed fee agreement in 2000.

The Agreement of 2002

118. By January of 2002 the Claimant recognised that there could be some commercial advantage in providing a new version of SET/TURN compatible with a newly issued version of AS/SET version 8.1.
119. KDP was no longer an affiliate of AS/SET and was not entitled to use the new AS/SET product free.
120. Mr. Passey was reluctant to pay $31,000 for a licence for AS/SET version 8.1 to enable a new version of SET/TURN compatible with AS/SET V8.1 to be created or to commit the time and money to write it.
121. It is evident in the correspondence between Mr Passey of KDP and Mr Schlieben of SoftLanding that the take up of SET/TURN had not been as great as originally expected by Mr Passey. There were only 45 users, most of whom were content to rely upon the earlier and tested versions of SET/TURN 5.2 and 5.3.
122. In his letter of 24^th October 2001 Mr Passey wrote to Mr. Schlieben saying:-

"… You also stated in an email dated 08.08.01 that I "was understandably reluctant to invest in AS/SET 8.1" so what has happened between now and then?

I like SET/TURN and our relationship, but as we have now got to a point where we have just started to make money on SET/TURN I do not want to pile another $31,000 into an old technology, in the hope that this current trend will continue, however I am more than happy to continue the turnover side of the maintenance as we had discussed, I do not appreciate the moral paragraphs in your last email. We have maintained our business relationship even though any written agreement we had expired in 1998 which included exclusivity.

Our predicament is purely a commercial one, and I hope that you will see it that way – we have spent a certain amount of money on a product which did not make us what we expected, and now, when we are starting to regain our investment and some profit, you expect us to pile more money into it.

Would you consider SLS paying us some advance upgrade fees to cover AS/SET license fee, I'll take on the development and the AS/SET license we can carry on as usual, that is if you are sure that the revenue stream is there. Paul, you have probably gathered money is the issue here, we don't have a spare $31,100 to invest in a dying product. "

123. Paul Schlieben's position was to persuade Mr Passey that from a commercial point of view it would be advantageous for KDP to provide a new version of SET/TURN that was compatible with AS/SET V8.1. In January 2002 it was agreed that SoftLanding would pay $25,000 to KDP for a V8.1 compatible version and provide support for one release back and for three years ahead.
124. It was agreed that SoftLanding could retain license fees up to $25,000 in the first year to recoup some of their costs, but in the event of a shortfall they would bear the loss. Both parties recognised the necessity for a new legal agreement. It was SoftLanding's suggestion that KDP's obligation to keep the software current for the AS/SET V8.1 releases was expressly limited to three years. This agreement was not merely an accounting arrangement. A new bargain was clearly necessary if KDP was to produce a new version of SET/TURN with the necessary support. Had there been a pre-existing obligation, there would have been no necessity to conclude such an agreement either for the new release AS/SET or to support one release back.
125. Indeed on 22^nd October 2001 Mr Passey had made it clear to Mr Schlieben the basis upon which he understood SET/TURN was to be sold:-

" … make it known to any future clients SET/TURN may not be upgraded to the next release of AS/SET and it is purchased on that basis."

Furthermore:-

"I can tell you categorically that KDP will not be handing over SET/TURN to SoftLanding free of charge even if we decided not to upgrade to 8.1."

which strong expression of intent would serve to demonstrate that no agreed provision for default ownership akin to the provisions of clause 10.3 or 10.4 can be implied.

126. From the conclusion of that side agreement until three years later the position as to the support was governed by the express agreement arrived at.

Waiver and estoppel

127. SoftLanding alleges in its reply that by the parties' continued business relationship after 6^th December 1998 the parties waived strict reliance on the need for a "written instrument executed by both parties" to extend the agreements as expressly provided for in clause 10.1. However, no incompatible rights that could give rise to an election have been identified by the Claimant, neither is there any evidential basis for inferring an unambiguous representation that KDP was forgoing its right to insist on compliance with clause 10.1, either by conduct or expressly.
128. I find that there is also insuperable difficulty in the Claimant's reliance upon estoppel to found their argument that all terms of the agreements remained in force after 6^th December 1998, since there was no unequivocal representation by KDP that the agreements in their entirety continued. There is no evidence that SoftLanding relied upon any such alleged representation and prejudiced their position by behaving in any different way.
129. It is significant that prior to the written agreements the Claimant was content to offer licences to SET/TURN and DOCUMENTOR and maintenance to end users without the so-called protection of all the terms of the written agreements in place, and after the written agreements expired were content to conveniently ignore the terms of the agreements they found onerous.

The terms of the implied agreement between SoftLanding and KDP

130. Until May 2008 throughout all rights in relation to the software including the copyright have been owned by KDP.
131. This has never been the subject of challenge during this period.
132. It follows that a licence from KDP is required by SoftLanding or any other third party to do any act that, but for such licence from KDP, would infringe the copyright of the software.
133. Following expiry of the agreements on 6^th December 1998, SoftLanding continued to grant both software licences to new end users and annual maintenance licences in respect of the software to existing end users.
134. KDP implicitly consented to SoftLanding continuing, post 6^th December 1998 to grant software licences and maintenance licences, such implicit consent being on the basis that KDP had not given SoftLanding permission to grant software licences or maintenance licences on any terms other than those provided in Exhibit B to the written agreement, save for price increases. SoftLanding never sought permission to amend or vary the agreed basis of granting licences. There is no commercial reason why KDP should give away their rights to the software of either SET/TURN or DOCUMENTOR. Indeed, when it was suggested by Mr Schlieben in October 2001 the suggestion was sharply rejected by Mr Passey.
135. KDP as at the 6^th December 1998 had no knowledge or reason to believe that SoftLanding had granted or purported to grant software licences or maintenance licences on any other terms than those provided by Exhibit B to the written agreements.
136. It is an implied term that the software licences and maintenance licences granted by SoftLanding, who had ceased to have exclusive rights to license, were to be only in accordance with the terms provided at Exhibit B to the agreements save for any price rises later agreed.
137. In the period shortly before the expiry of the agreements on 6^th December 1998, SoftLanding provided KDP with a royalty statement that explicitly calculated the SET/TURN royalty for both a software licence and for a maintenance licence on the percentage of the basis agreed and followed during the currency of the written agreement. On 21^st September 1999 Alison Bergeron of SoftLanding faxed to Mrs Passey at KDP a royalty statement in respect of a software licence and a maintenance licence granted to Nypro, Inc. Nypro, Inc was a typical and representative end user in my judgement. It was reasonable for KDP to accept that this royalty statement expressly set out the basis of assessment being applied in respect of all end users. The royalty for the SET/TURN software licence equated to 75% of the end user price and the royalty for the SET/TURN maintenance licence equated to 75% of the end user price. The end user price for the maintenance agreement equated to 18% of the end user price for the software licence.
138. I accept that SoftLanding continued from 6^th December to pay KDP royalties on what KDP believed to be the percentage basis agreed.
139. Thereafter payments were on a monthly basis and represented a percentage basis for calculation in accordance with clause 8 of the written agreement based on the gross prices received. At no stage in their dealings post 6 December 1998 did SoftLanding seek to adjust the conditions for entitlement to payment or the time regime as to payment save for the express agreement in 2002.
140. The term to be implied, according with KDP's known and continuing need to have a regular income flow, was that SoftLanding continued to be obliged to account monthly and pay monthly where appropriate.
141. Royalties in respect of software licences and maintenance royalties were on the basis of 75% of the gross price paid by the SET/TURN end user and 50% in respect of DOCUMENTOR.
142. On the basis that SoftLanding would regularly and accurately declare to KDP the royalties that were payable, together with the name of the relevant end user and the type of licence, KDP issued software passwords to SoftLanding for use by the end users who had been properly licensed and in respect of whom KDP had been paid a royalty by SoftLanding. KDP would also provide the services set out in Exhibit B to the written agreement under the heading maintenance paragraphs (i) to (iv), the end users having been properly licensed and in respect of whom KDP had been paid a royalty by SoftLanding in advance.
143. After the 2002 agreement KDP continued to support the new version of SET/TURN (version 5.3.1) compatible with the AS/SET V8.1 for the three year period agreed, as well as supporting the majority of end users who continued on versions 5.4 and 5.4.1 of SET/TURN, and whose maintenance licences were in the form of Exhibit B to the written agreements and who had complied with the pre-conditions to the entitlement to services laid down and in respect of whom SoftLanding had paid KDP in advance.
144. KDP's obligations to assist SoftLanding remained until notice to terminate the agreements between KDP and SoftLanding expired. A sensible commercial man in the shoes of the Defendant would have considered the Claimant's maintenance "legacy" obligations to the end users under the current assignable maintenance agreements, and any legacy obligations thereafter that the Claimant would have under the agreements. A reasonable period of notice as such would enable the Claimant to make such provision for such maintenance as it judged appropriate, whether personally through a renegotiation with KDP or some other service management provider. The Claimant's commercial advantage was that the end users were tied in to non-assignable agreements with the Claimant, who could charge whatever the market would stand for the services provided. SoftLanding, once it was taken over by Unicom, demonstrated the success of its aggressive pricing policy.
145. Mr Onslow contended that by implication termination continued to be governed by clause 10 of the written agreements whereby KDP either had to give six months notice for convenience and yield the source code to SoftLanding in the meantime, regaining it only if they sold it on, or, should there be a cessation of business, then the ownership had to be given up to SoftLanding. These onerous provisions were apt to support the value of the exclusivity rights and reflect the Claimant's financial outlay for marketing for the three years of the written agreement.
146. Post 1998 there was no need for the implication of such a term and no commercial basis for the implication of a term that would penalise one party by the loss of rights in the software, according to Mr Onslow in perpetuity, because the source code was necessary to enable SoftLanding to support the end users.
147. Had it been suggested to Mr Passey in 1998, after the agreements came to an end, that he was not entitled to walk away from the relationship with SoftLanding, even on giving reasonable notice, without losing his rights in the software, he would have given a similar sharp retort as he did to Mr Schlieben in 2001 as to the suggestion of a transfer of ownership of the software to SoftLanding, when he identified to him the value of the product to other service management companies.
148. For commercial efficacy a period of reasonable noticed is to be implied.
149. A reasonable period of notice for terminating SoftLanding's non-exclusive rights to issue licences for software and maintenance licences for convenience would be a period of six months, save where there are material breaches of which KDP has given notice in writing, and were not remedied as required when no further notice would be required, by way of example where SoftLanding had by itself or otherwise caused a breach of copyright, where there is late payment, non-payment or under-payment coupled with a failure to make disclosure as to end user payments. Entitled end users would receive support until the end of their current maintenance period.

Termination of the Agreement

150. Between January of 2007 and May of 2008 the co-operative relationship between the parties deteriorated and became adversarial towards the end. The sensible sharing of information as to which end users were paid up and thereby entitled to KDP's supported maintenance was not continued, in part because the administration of the SoftLanding operations was represented by Mr Watt, as having been moved from New Hampshire to California, and the "back office" administration undertaken by Unicom's Mr Watt and his subordinates had teething difficulties. The Passeys became concerned at the lack of frank communication, and the failure of Unicom on behalf of SoftLanding, as they perceived it, to abide by the terms of the agreement that maintenance agreement and royalty payments were to be paid in advance both by the end user and SoftLanding. The Passeys not unreasonably drew inferences from the apparent paucity of renewals and late payments that warranted the conclusion that the revenue base for their business was so depleted that it would not be worth continuing to support the maintenance agreements.
151. Mrs Passey's email of 15^th May 2007 epitomises the difficulties identified by KDP during this period:-

"I would like to finalise this before I go on leave tonight. I will be in France for the next two weeks and I want to know what cover I need to provide for SET/TURN and DOCUMENTOR – at the moment there is none, as we have received very little in maintenance payments since Unicom took over SoftLanding.

To be clear – we did stop the last wire because it looked like you were going to pay at the 1995 price and I think our copy of the agreement cleared that up. So we are all now clear that we are 75% of the current price on SET/TURN and 50% of the current price on DOCUMENTOR. It would appear that SoftLanding have indeed been selling our services at a higher rate than we have been compensated for – but in the interests of our ongoing relationship I would be prepared to ignore that, provided we get things back on an even professional level quite quickly.

As at the end of April 18 clients are now outside of maintenance – and we need to either get them paid up or we will write to them advising them that we will no longer be supporting them.

Neil – I appreciate that your time is valuable – but so is mine – and frankly what we are dealing with is hardly complicated.

I would appreciate an update today – how much and when will the wire be?"

And on 31^st May 2007 there was an email detailing what end users were overdue in their maintenance payments, giving instances of end users who had paid up but whose royalty payment had not been paid to KDP by software:-

"Neil this has become overly complicated and time consuming for both KDP and Unicom – would Unicom consider buying outright the rights to SET/TURN and DOCUMENTOR – KDP could then support Unicom on a time and materials basis if and when the need arose… The revenue for these clients would have been in our bank under the old regime and frankly I do not wish to spend my time pressuring you to pay us what is owed … "

152. On 18^th September 2007 Mrs Passey sent an email to a number of recipients at SoftLanding stating that, given the number of end user clients that had not renewed with Unicom, it was not in KDP's interest to continue. Adding:-

"Of course we will support our clients that are currently on maintenance until their next renewal date. Please inform all clients out of maintenance that the products have been withdrawn."

153. This followed an earlier expression of frustration by Mrs Passey in an email of 14^th September 2007 saying that she thought there was a procedure in place whereby a settlement was sent each month:-

"I emailed you a couple of times … and you just seemed to be ignoring me. We now have eleven clients out of maintenance with a further three this month. Neil, we do really need to know where we stand on a month by month basis. If these clients do not wish to renew, KDP software has to make a decision as to whether this product is still viable. I would grateful if you could answer this email today. "

154. The only reassurance that Mr Watt had to give was that he was having some accounting software problems which he expected to fix in a day or two and asking Mrs Passey for information about specific transactions that were clearly SoftLanding's responsibility.
155. Internally, however, there was a great deal of activity between Unicom in California and SoftLanding personnel in New Hampshire, ascertaining the status and maintenance entitlement of the 14 companies helpfully named by Mrs Passey.
156. It is evident that there was a significant non-compliance by SoftLanding as to their duty to account as to the status and entitlement of end users in relation to maintenance agreements, and a failure to pay royalties to KDP. More serious, however, was the failure of some end users to comply with the licence obligations set out in Exhibit B, both as to payment and as to entitlement of current maintenance support. To those who were not, SoftLanding owed no duty, let alone could it be said that KDP owed any obligation to supply support to SoftLanding in the absence of timely payment by SoftLanding. It is clear that some end users had not made payment up to five months after the due date.
157. Following those emails Mrs Passey spoke to Mr Neil Watt, who re-iterated the excuse that moving the billing to California was the cause of delay and it was being dealt with. Mr Watt furthermore told Mr Passey that Unicom was a cash-rich company and he would appreciate Mr Passey's input as to companies to purchase. Mr Passey interpreted this as a reference to the possibility of Unicom buying SET/TURN and DOCUMENTOR from KDP.
158. Thus his email of 20^th September 2007:-

"Neil, your last comment got me thinking. Would Unicom be interested in buying KDP software? I'll wait to hear from you. Thanks again for your time I think we have calmed the waters again."

159. The last comment indicates that neither KDP nor SoftLanding regarded the email sent by Mrs Passey as notice to terminate the arrangements between the parties. Nonetheless it did not detract from the strength of the justified criticisms voiced on behalf of KDP as to the breaches of the obligations to declare end user payments in relation to licence and maintenance and to pay the royalties as required, in the agreed timely way.
160. On 16^th January 2008 Mr Passey emailed to Mr Watt:-

"Happy New Year to you.

Firstly the 38 clients we used to have is diminishing at a fair rate now. Almost half the base has not renewed the SET/TURN /DOCUMENTOR maintenance. So we have decided it is something that we don't want to continue with on several fronts. Although we have no notification of any cancellation from yourselves. Most of the issues are administrative and would disappear if you owned the product.

It is probably something which is worth doing from your point of view as I imagine that a lot of TurnOver maintenance is dependent on it. "

He promised his technical support for any transition of ownership and assistance in setting up appropriate support systems for Unicom.

161. On 26^th January 2008 Mr Passey reiterated that KDP would not accept more out-of-date renewals on the basis that 50% had not renewed, and by the end of January a further non-renewal would be recorded. A reminder was made as to the sale proposal mooted earlier. It prompted Mr Watt's reply:-

"Dear Kevin,

Your agreement with us requires you to give us a six-month notice before you drop the products.

I am sure you understand the practical necessity of this requirement.

I understand that you would like to terminate the relationship between KDP and Unicom/SoftLanding. If that is in fact correct, your notification of termination will be effective in July 2008.

Please continue to provide the services until then, if it is in fact your intention to terminate.

So, what I require from you at this point is an unambiguous message about your intentions re SET/TURN. If it is your intention to terminate the relationship with us, we would like to consider a purchase of the code.

But until such an agreement is reached you are required to continue to provide service to July 2008." (emphasis provided)

Mr Passey wrote reminding SoftLanding that the written agreement had expired but if Mr Watt had anything to the contrary he would like to see it, and assuring him that KDP would comply with anything in writing with SoftLanding.

162. Following a long period of silence KDP wrote on 10^th March:-

"Further to our conversation some five weeks ago and your failure to return any of my subsequent emails/telephone calls, I would request the following under the terms of our agreement with SoftLanding.

Under section 3.2 you are required to submit to KDP software 'a complete and accurate written report of your activities etc etc'.

What I would like to see under this is specifically all licence and service/maintenance agreements executed – which would include what has been charged to the end user. This I would like to see as of the end of June 05, December 05, June 06, December 06, June 07, December 07 – to date we have never been given this information. I'd like this as soon as possible. Please also confirm receipt of this email."

Since these obligations were clearly to be implied into the post 1998 Agreement with SoftLanding, KDP were entitled to receive the information requested.

163. On 10^th March 2007 Mr Watt wrote complaining that Unicom was suffering damage "as the assignee of the SoftLanding agreement" because of KDP's alleged failure to provide support to Unicom's customers who were unable to give maintenance services to their customers. He named Abbott and Group Dekko.
164. This was the first mention of any assignment by SoftLanding to Unicom of the benefit of the agreement between them.
165. I am satisfied, having considered the detailed evidence in relation to both Abbott and Group Dekko, that the appropriate source codes, both temporary and permanent, were furnished to them on the basis of the information provided by SoftLanding, and that there is no substance in Mr Watt's criticism.
166. On 11^th March 2008 Mr Passey set out KDP's position:-

"As a software house we have been providing Unicom Ad-Hoc software and services in the absence of any agreement which includes the provision of keys and advice of a support nature, as we would with any bespoke client, this has been without prejudice and in good faith. We have provided all the services that you have paid us for, however now that you have discontinued any payments to us, of course that service has stopped. Neil, our refusal of support is directly related to your refusal to work with us and indeed pay us correctly and on time. We refused the last payments because they were out of date, late and in Abbott's instance incorrect.

Can I suggest that any damages to the relationship of your clients has been entirely due to you not addressing these issues when you said you would – namely renewing the agreement and making sure that the maintenance contracts are executed on time, and that we were correctly paid for our services and that we were kept up to date on price changes and maintenance contract renewals – none of which has happened, all of which was in the expired agreement along with the relevant indemnities that you must provide us with.

I have no interest in coercing money out of Unicom, indeed you suggested that you were interested in purchasing the source.

As I see it we have two options.

1. As the agreement has been allowed to lapse you return or destroy any materials you have for both SET/TURN and DOCUMENTOR and as previously requested you stop selling KDP's software services as we have no agreement in place to protect us both.

2. You start talking to us and stop threatening us so that we can resolve this amicably, we can then discuss restoring support. "

167. In the absence of any reply he confirmed that KDP had supported clients who were currently paid for, but Abbott was not one of these, but a temporary code would be available, provided the support problem was resolved:-

"So let's be sensible and spend our efforts on resolving this and not digging a bigger hole for us all to fall in.

If you are in agreement I will send you a temporary code for Abbott, however we do need to resolve payments. Let's have a proper conversation about what we are going to do SET/TURN and DOCUMENTOR and discuss all the options about issues we have.

Neil, this has worked with SoftLanding since 1995. It is not difficult – the whole issue here is for us to be properly compensated for our software and services in a professional and correct manner. "

168. The parties agreed a 90-day period whereby support would be given whilst the parties considered their future relationship. In his email of 14^th March 2008 Mr Watt confirmed that only 40% of their billings had been collected, reiterating that there was confusion caused by the SoftLanding/Unicom takeover.
169. Thus it can be seen that there were two contradictory themes running through the increasingly acrimonious communications between the parties.
170. KDP was insisting upon prepayment before it would give support and timely payment, together with proper information as to prices charged to end users.
171. SoftLanding sought confirmation that support would be forthcoming before it would pay any monies owing to KDP and was reticent about giving any information about gross prices charged to end users.
172. Both parties were flexing their commercial muscles, whilst SoftLanding was considering the purchase of the software from KDP, and making appropriate internal, financial and technical enquiries. Matters came to a head on 9^th May 2008, four months after Mr Passey's letter of 16^th January (above). The letter is in the following terms:-

"On January 16^th … you sent an email which communicated the desire of KDP to exercise its rights, pursuant to sections 10.3, to unilaterally terminate the two (2) contracts between KDP and SoftLanding systems, dated December, 1995 for the licensing by KDP to SoftLanding of the products SET/TURN and DOCUMENTOR respectively."

Because KDP drafted these contracts, KDP must be fully familiar with its obligations in the event of its unilateral termination of these contracts. Further, SoftLanding expects that KDP will fully comply with all of its obligations contained in the termination provisions of these contracts.

173. This requires KDP to do the following:-

" (a) Maintain its support obligations contained in section 7 for a period not less than six months after the notification of its intent to terminate, see section 10.3. Because your notification to us was January 16^th this would terminate your support obligation on July 16^th.

(b) Provide SoftLanding, distributor of SET/TURN and DOCUMENTOR source code for the products to be used only for the express purpose of continuing to support its customers, see section 10.4 as amended by Addendum A in each of the contracts

These requirements are necessary for the continued uninterrupted operation of the software by end users. KDP's termination, should it occur without providing SoftLanding with source codes or assurances that it will continue to provide support, may adversely impact SoftLanding's ability to provide technical support for clients, potentially resulting in a request for refunds and damage to our business reputation through the i series business community. Hence, KDP's refusal to abide by the plain language of these contracts will necessarily expose KDP to potential liability to SoftLanding due to substantial damages which SoftLanding may sustain, including but not limited to claims for indemnity, in addition to damage to SoftLanding's business reputation. We are hopeful that such damages and resulting claims can be avoided…."

174. KDP's Mr Passey acknowledged the letter and expressed surprise by its tone, believing that he had done everything in his power to resolve the matter in a friendly way and said he had referred the matter to his lawyer. The letter of 8^th May 2008 was part of the commercial sabre-rattling unedifyingly engaged in by these parties and is part of the background to the agreement evidenced in Unicom's letter of 22^nd May 2008. The first paragraph is in the following terms:-

"SoftLanding proposes the following, with express understanding that the distributor agreements executed between SoftLanding and KDP in December of 1995 (the "contracts") are in no way changed or altered and that both parties retain all rights pursuant to them."

Thereafter follows an agreement whereby SoftLanding agreed to pay KDP $63,371.63, monies clearly paid by end users and withheld from KDP. SoftLanding agreed to pay Abbott Diagnostika's maintenance licence renewal on 23^rd May, and KDP agreed to issue the appropriate code.

175. As to the future, KDP affirmed its willingness and ability to provide continuing support for SET/TURN and DOCUMENTOR clients provided by SoftLanding.
176. It is of significance that amendments made to the memorandum of agreement by KDP emphasized the existing obligations of SoftLanding to account and declare in relation to end users' identities gross payments and entitlements, and emphasized the necessity for prepayment for Abbott Diagnostika's renewal.
177. Had SoftLanding an entitlement to delivery up a source code prior to the May agreement, this of course was preserved by the May agreement, and if KDP had entitlement to further royalty payments before the agreement, this too was be preserved by the May agreement.
178. The May 2008 agreement did not deal with new versions of SET/TURN and DOCUMENTOR, for example V6R1. There is no basis for implying any further obligation that had not existed since January 2005 and had not been expressly or impliedly contemplated by the parties at the time of the 2008 agreement.
179. On 29 May 2008 Mr Hong raised the temperature and wrote the following letter:-

"Dear Mr Passey

Your recent demands, coupled with threats to refuse to abide by the clear terms of the distributorship agreement which in our respective companies has raised serious concerns, specifically KDP's refusal to provide Abbott Diagnostika and other SoftLanding customers with technical support including needed passwords and access to products, SET/TURN and DOCUMENTOR, constitutes nothing more than a thinly veiled attempt to exert pressure upon SoftLanding in order to extort contractual concessions. Surely you are aware that your tactics constitute an ongoing threat to our clients, including Abbotts' business operations.

Even more troubling, your tactics go beyond withholding passwords, technical support and access to the products. It has come to my attention that you have actively inserted yourself between SoftLanding and its client, Abbott Diagnistika, in an apparent attempt to interfere with and undermine our relationship. Be advised at going forward, save to provide passwords and support, you are not to contact any of SoftLanding customers.

Finally be advised that KDP's apparent failure and/or refusal to make and provide required updates and enhancements, and/or other improvements to SET/TURN or DOCUMENTOR, has compromised the economic viability of these products and constitutes a further breach of the distributor agreement at paragraph 7. Absent KDP's willingness and/or ability to effectuate the required upgrades, please provide forthwith to SoftLanding the products' source codes in order that SoftLanding might enhance and modify the programmes.

Reserving all of our rights, please be advised SoftLanding intends to wire to KDP the sum of £63,371.63 on or before 30^th May 2008."

180. On the evidence before me there is no basis for the assertion that KDP had refused to provide Abbott Diagnostika or other SoftLanding customers with technical support as required and in the light of the information supplied by SoftLanding and the relevant customers. I am satisfied that KDP provided the source codes, temporary or permanent as appropriate, in accordance with the strict entitlement of the end users, based upon their compliance with the terms of Exhibit B and those of SoftLanding to pay KDP. Those customers include 3M/3M Brazil, Abbott Diagnostika, Birds Eye Foods Inc, Boehringer UK and Group Dekko Services. As to paragraph 3 of the letter, there is no evidence of any agreement by KDP to provide updates and enhancements to SET/TURN or DOCUMENTOR. After the agreement came to an end in 1998, the obligation was to maintain by providing technical support and the relevant codes in relation to the existing licensed software and the nominated hardware, save for the three year period expressly agreed between SoftLanding and KDP in January 2001. There is no basis for holding that the first paragraph of the letter of 22^nd May of 2008 imposed such a radical and new obligation upon KDP. There is no basis upon which SoftLanding could be entitled to the possession of the source codes, let alone possession for the purposes of enhancing and modifying the programmes, the copyright of which was vested in KDP and at all material times has remained so.
181. On 6^th June 2008 KDP's solicitor wrote replying to Mr Hong's letter. He explained that in relation to Abbott Diagnostika there was no direct contact. Such contact as there was was with Herr Vogelbusch, who purported to be SoftLanding's agent in relation to Abbott Diagnostika's licence and who was contacted to reassure Herr Vogelbusch that KDP did not intend to cease its distribution of the products permanently, as wrongfully asserted by Mr Zurich of Unicom.
182. KDP's Solicitor Mr Mitchell gave full notice of breaches of the agreement between KDP and SoftLanding. He required complete and accurate written reports of licensing activities and copies of the licence and service agreements executed by SoftLanding and Unicom which had not been provided and, sought a breakdown of the fees paid by all end users, discounts to agents and the price upon which fees payable to KDP had been calculated.
183. 14 days was given to remedy these breaches. The contractual requirements were particularised by reference to the clauses in the original agreements which expired in December of 1998 and which by implication continued to have application thereafter, as to be inferred from the dealings of the parties and their conduct.
184. No further payments were forthcoming, neither was the information requested furnished. On 4^th July 2008 KDP through their solicitors wrote to Unicom Systems, Inc. saying that the agreement had been terminated. That was repeated in a letter of 11^th July 2008 to SoftLandings Systems, Inc.
185. On 11^th July letters were also written to a number of third parties, including VALOK, Global Midrange Software Solutions of Australia, whom it was believed were agents of SoftLanding, Inc, notifying them that they had no right to distribute, license or deal in the products, and neither had their clients, and asking that details be furnished of end user charges, discounts given or deductions made with respect to fees for the software products, and charges levied by them in their capacity as agent/distributor of the products, and asking for documents relating to the transactions.
186. Similar enquiries and the contemptuous limited disclosure given by the Claimant in this case have demonstrated extensive under-accounting and earlier neglect to comply with the declaring obligations, and later a deliberate refusal to comply with such obligations, even when prompted by particular requests and finally a formal notice.
187. I am satisfied that there were significant amounts of money owed by SoftLanding and Unicom to KDP. The ascertainment of the precise amounts will of course await the quantum trial. The breaches as such in my judgment were material and warranted termination of SoftLanding's non-exclusive rights to licence KDP's software products and KDP's support in relation to new maintenance agreements.
188. As acknowledged throughout in their correspondence and in the pleadings, KDP's obligations to support the paid-up recipients of services under the proforma-like agreement following Exhibit B remain until terminated by notice.
189. During the trial the evidence on behalf of the Claimant was that of Mr John Zurich, an employee of SoftLanding and Mr Neil Watt, the Chief Financial Officer of Unicom.
190. Mr Zurich's firsthand knowledge of SoftLanding's dealings with KDP was limited. His written statements contained a great deal of opinion and reconstruction that indicated a critical loyalty to his superiors at Unicom. I did not find him an impressive witness and as to the relationship between SoftLanding and Unicom he was less than frank.
191. Mr Neil Watt, the Chief Financial Officer of Unicom and SoftLanding, described the nature of the relationship between SoftLanding and Unicom. Much was made of the fact that SoftLanding, Inc elected to become a Qualified Subchapter Subsidiary of Unicom on 1^st January 2007 under provisions of the US Internal Revenue Code. Mr Watt told the court that although Unicom and SoftLanding retained their own legal identities, for example in relation to their rights and obligations under contract to third parties, the companies are treated as one for federal tax purposes, allowing SoftLanding to take advantage of the administrative support and infrastructure of Unicom without the necessity to carry out separate computations to apportion business income and expenditure between the group of companies.
192. In paragraph 11 of his sworn statement of 1^st September 2009 Mr Watt stated:-

"Indeed since acquiring SoftLanding in 2006, Unicom has taken over SoftLanding's back-office functions. This includes the management of all accounts relating to the supply and maintenance of TurnOver, SET/TURN and DOCUMENTOR, including the invoicing and collection of payment."

Unicom has also taken an active role in software distribution on behalf of SoftLanding, including the distribution of SET/TURN and DOCUMENTOR.

193. That was a recurrent theme of his evidence on days 4, 5 and 6 in his cross-examined evidence. He also emphasised that in relation to Unicom, SoftLanding had the right to call for monies collected by Unicom on their behalf whilst exercising this back-office administrative function in relation to TurnOver. On day 6 Mr Watt mentioned an agreement between Unicom and SoftLanding transferring the licence held by SoftLanding to Unicom, so that Unicom could then "upgrade the licensing". It appeared that this was an undisclosed assignment or transfer and it was produced on the following day.
194. Prior to 1^st January 2007, $14m of annual earnings were attributable to SoftLanding.
195. After 1^st January 2007 no income from TurnOver, SET/TURN or Documentor was received or receivable by SoftLanding. Mr Watt accepted that the agreement covered he licensing and provision of maintenance for both TurnOver and SET/TURN and that if Unicom provided maintenance, then pursuant to the agreement the money belonged to Unicom. In relation to licences Unicom was entitled to retain 100% of the monies paid. He confirmed that Unicom was not Softlanding's agent under this agreement.
196. In the light of this document of assignment, it is clear that from 1^st January 2007 Unicom was not handling the back-office functions for SoftLanding. It was conducting business on its own account. SoftLanding had no entitlement to call for the licence fees or maintenance fees charged as Mr. Watt had consistently represented to be the case.
197. Since Mr Watt at all material times was the Chief Financial Officer of both Unicom and SoftLanding, he must have been aware that this agreement was in place and of his clear duty to disclose it, both in relation to the injunction proceedings in December 2008, the application for security to costs in 2008 and in these proceedings. Mr Watt, as a practising California attorney, could have been in no doubt as to his obligations to disclose and of the effects of his written evidence supported by his parties' sworn testimony in court.
198. In the Claimant's particulars, pursuant to the order of 20^th April 2009, the Claimant set out their case as to how the revenue received by Unicom Systems, Inc gave rise to the loss of revenue or reputational damage to the Claimant, SoftLanding Systems, Inc. The statement of truth was signed by Mr Watt and asserted the account given in his sworn written evidence and in the evidence prior to disclosure on day 7 of the trial. No mention was made of the true status of the companies as to entitlement to monies received in relation to licences and service agreements, as provided for in the assignment of 1^st January 2007.

Alleged Breaches by KDP

199. These were relied upon by the Claimant in respect of the claims for interim relief and in this trial.
200. The principal breach relied upon is the alleged refusal of KDP to provide source codes. Mr Watt and Mr Zurich gave evidence that KDP wrongly refused even to provide a temporary password to 3M/3M Brazil. A password for 3M Brazil was requested on 10^th September 2008 and again on 6^th October 2008 so that 3M could run SET/TURN on an upgraded computer to be installed in Minnesota, USA. They did not have a valid maintenance licence, the previous one having expired in October of 2007. The code was requested for a machine in respect of which KDP had received no licence fee or any upgrade fee. It was a new machine with a processor in a higher processor group than that which 3M had previously used. There was no obligation upon KDP in my judgment to provide passwords in such circumstances. There is an allegation that KDP breached maintenance obligations by not responding quickly enough to technical enquiries made by 3M. There is no evidence to support such an allegation.
201. In relation to Abbott Diagnostika the complaint is that a password was requested on 25^th January 2008 and a temporary password was not provided by KDP until 14^th March 2008, causing two months of disruption to the end user. And then a temporary password was issued on 7^th May 2008 which did not work. In addition a password provided for DOCUMENTOR on 23^rd May 2008 did not work either. I am satisfied that an email request for a password was made on 25^th January 2008 for an upgraded computer with a processor within the same processor group as that originally licensed. KDP were not paid the correct sum in relation to Abbott Diagnotika's maintenance entitlement and Mr Watt was informed of this on 26^th January 2008. Abbott Diagnotika's entitlement to maintenance had come to an end on 1^st December 2007 notwithstanding failure to pay for the maintenance entitlement. KDP nonetheless on 14^th March 2008 issued a temporary password. On 1^st April 2008 KDP were also asked for temporary codes for Abbott Diagnostika, to enable the migration of software to another computer in the same processor group. The requested passwords I am satisfied were emailed ten minutes after the request was received.
202. It is evident that SoftLanding then asked for another password in their email dated 8^th April and KDP replied three minutes later, saying those already provided were valid until 1^st May 2008. On 9^th April 2008 a repeat request to send passwords was received and KDP did so within the hour.
203. On 7^th May 2008 KDP were asked to provide further passwords because the previous temporary ones were about to expire and these were provided within the hour, being valid until 31^st May 2008. It transpired that the passwords did not work and this was apparent to SoftLanding On 13^th May. They failed to inform KDP until 15^th May.
204. KDP still had not been paid in accordance with their contractual entitlement for the maintenance. The position was made clear to Mr Zurich, who required passwords before the money was sent. Ultimately on 23^rd May 2008 the appropriate payments were made and KDP provided the permanent passwords for Abbott Diagnostika, as is evidenced by the email of 23^rd May 2008. Passwords were for version 5.3 of SET/TURN. Later KDP, on learning that Abbott Diagnostika was using version 5.3.1 of SET/TURN, an hour later sent another password suitable for that version.
205. In relation to DOCUMENTOR there was clearly difficulty with the password provided and specific information was requested by KDP to ascertain the technical problem. That information was not provided to KDP and in consequence they were unable to satisfactorily comply with their obligation through no fault of their own.
206. Mr Watt complained that KDP wrongfully and actively interfered with SoftLanding's contract with Birds Eye and provided maintenance services directly to this end user.
207. On 20^th November 2008 Birds Eye requested KDP to provide a disaster recovery code. This was after KDP had terminated its relationship with SoftLanding. It appeared that their maintenance had been paid through to 14^th March 2009. Birds Eye confirmed to KDP that they had in fact paid a sum of $6,599 to SoftLanding. SoftLanding had underpaid the royalty due to KDP under the implied agreement and KDP elected not to provide the service through SoftLanding. Birds Eye volunteered to pay KDP directly, receiving this service directly from KDP. Since SoftLanding had significantly underpaid the royalty to which KDP were entitled, KDP were entitled to deal directly with Birds Eye.
208. SoftLanding alleges that KDP failed to provide passwords to Boehringer-UK. The evidence is that they did, although there may have been some initial misunderstanding as to Boehringer's current prepaid entitlement. I am satisfied that KDP provided, by agreement with Mr Ian Western of SoftLanding Europe, the appropriate valid temporary passwords required enabling Boehringer-UK to have uninterrupted use of this software. On 15^th May 2008 a permanent code was issued to Boehringer-UK. One was issued despite the fact that there was a different processor group without requiring payment.
209. In relation to Group Dekko Services LLC, Mr Zurich supports this allegation also, saying that KDP had breached its obligations to Group Dekko by failing to supply them with a new version of SET/TURN that was compatible with the upgraded V6R1 operating system. I am satisfied that such complaint derives from a basic misunderstanding by Mr Zurich and Mr Watt as to the obligation of KDP. They were under no obligation to create or supply newer versions of the software in respect of any end users in the period from December 1998 until 17^th January 2002 and from 18^th January 2005 onwards.
210. In relation to Olex, there was a licence issued by Valok Holdings Pty. No evidence has been produced to show that requests for such passwords were in fact made.
211. In relation to Ortronics, Inc, similarly.
212. In relation to General Binding, Mr Watt gave evidence that, although KDP provided temporary passwords, the customer specifically requested a permanent password to ensure there was no disruption at its maintenance renewal date on 31^st May 2008, and that in fact the password was not provided until 2^nd June 2008, two days after the renewal date. A timed scenario of the dealings with General Binding and SoftLanding was provided in the evidence of Mr Passey covering requests between 24^th January 2008 in relation to DOCUMENTOR, when a 60-day code was issued, followed by a further code expiring on 24^th April 2008, and received a further password by SoftLanding. It transpired that there was confusion by SoftLanding as to requests for TurnOver codes as opposed to SET/TURN codes.
213. On 6^th May temporary codes were issued after they were requested.
214. On 2^nd June 2008 a permanent code for General Binding was sent to Mr Zurich. It is noteworthy that their maintenance had expired in February 2008 and was not paid until 4^th June 2008.
215. No entitlement therefore was shown. Nonetheless KDP, it appears, as a matter of grace complied with a number of requests made by SoftLanding to support the end user.
216. The Claimant had produced no evidence of the particular breaches that they have alleged.
217. The main thrust of SoftLanding's case, however, is that it maintains that KDP has failed to provide them with the source code for the product. It is common ground that this is the case. They have not parted with the temporary possession of the source codes. Nor, as is sought in the draft amended pleading served at the commencement of the trial, have they accepted an obligation to transfer the ownership of the software and copyright to SoftLanding. In any event, even on the basis of the claimants re-cast case I am satisfied that they were not entitled to call for possession of the source codes. KDP had complied with the agreement between the parties as to the level of support and payment for such support.
218. As to the implication of a term incorporating the provisions of clause 10.4 of the original written agreement, there is no basis for such implication. But the Claimant, in support of its case, sought to amend its Particulars of Claim to allege a further implied term of the agreements:-

"… If the end user could not acquire such modified versions from KDP, then it should acquire such modified versions from SoftLanding, and hence that, upon KDP's refusal or inability to supply such modified versions to end users, KDP would provide a copy of the source code to SoftLanding for this limited purpose."

219. Clearly the Defendant's obligation did not entitle end users to new versions of the software such as V6R1, it does not accord with commercial common sense to oblige KDP to supply such "modified versions" to SoftLanding.
220. Whilst business efficacy would require routine support, technical consultancy and bug fixing to be available to the end users, there are a number of obvious ways in which the end users could have received this technical support. KDP could have supplied modified versions to SoftLanding and these in turn could be supplied to the end user, or KDP could have supplied modified versions directly to end users or sold the source code to a third party and the third party could have supplied the modified versions directly to end users. KDP could have sold the source code to a third party and the third party could have supplied those modified versions to SoftLanding for onward supply to the end user, or KDP could have sold the source code to SoftLanding and SoftLanding could have created modified versions and provided them for the end user, or KDP could have sold the end user a source code licence allowing them to undertake their own maintenance but restricting any other use of that source code.
221. The fallacy of the Claimant's argument is to suppose that a businessman owning a source code would ignore his valuable commercial asset and forget about it. That would not make commercial sense because a source code is a business asset, as is the ability to restrict access to it. It can be sold and has a capital value, or it could be the source of an income stream by exploiting the source code with the end users by offering the maintenance services, or the owner could exploit it himself by offering those maintenance services. I am satisfied that there is no necessity for the implication of such a term.
222. Mr Onslow seemed to ridicule KDP's position that it could and wished to provide SET/TURN maintenance direct to end users and submitted there were both technical and practical reasons militating against KDP being able successfully to provide support direct to end users.
223. I reject that submission. Clearly KDP have the technical expertise and hiring in support staff paid for by realistic maintenance charges would occasion no difficulty. It is clear from the evidence of events post termination that the end users evinced an interest in being able to deal directly with KDP, but some felt inhibited by reason of the agreements that they had with Unicom, the third party in these proceedings.
224. Both Unicom and SoftLanding had the benefit of sophisticated communication systems and business management organisation systems. Furthermore, there were personnel both in New Hampshire, where SoftLanding were situated, and in California where Unicom was, presided over by Mr Corrie Hong and Mr Neil Watt. The relatively simple system operated prior to September of 2006, relying upon the goodwill of both parties, could well have continued with modifications.
225. The basis for the subsequent difficulties encountered by SoftLanding and Unicom was clearly of their own making and consonant with Unicom's intention to aggressively exploit SoftLanding's products with the enhanced benefit of KDP's products.
226. In December of 2008 SoftLanding, Inc was granted an interim injunction on the basis of the evidence then before the court.
227. It is necessary to consider the effect of the undisclosed existence of the agreement 1^st January 2007 upon this claim and the interim relief.
228. I will deal with the injunction application below, after dealing with the counterclaim made by KDP and the Part 20 claim against Unicom.

The agreement between Unicom and SoftLanding, 1^st January 2007

229. The agreement is between SoftLanding, Inc, who is the only claimant in these proceedings, and Unicom Systems, Inc, a co-defendant to KDP's counterclaim. Unicom is defined as "Distributor" in the agreement.
230. The agreement is governed by Californian law. Mr Neil Watt was ordered to procure the disclosure of the document on 1^st December 2009.
231. It is a document of seminal importance in these proceedings. Its existence must have been known of at the highest level in both companies. Mr Corrie Hong was the signatory. Mr Watt clearly would have known of it. No acceptable explanation as to the failure to disclose the document in these proceedings has been forthcoming.
232. I have already indicated above the impact of this document upon Mr Neil Watt's credibility.
233. He is a Californian lawyer with a current practising certificate. He stated that the agreement would run from 1^st January 2007 until at least 31^st December 2009. The agreement covered both SET/TURN and TurnOver and the licensing of these products.
234. The agreement covered maintenance of these products and the licensing part of the agreement also included upgrades. So far as payment was concerned, clause 4.1 covered licensing and upgrades, and clause 4.2 covered maintenance.
235. The agreement provided that if Unicom provided the maintenance, then it was Unicom's money and not SoftLanding's.
236. 100% of the licensing and upgrade money, except expenses such as tax, royalties to KDP and commissions to overseas "agents", was Unicom's, and nothing went to SoftLanding. (Clause 4.1)
237. Under the agreement Unicom and SoftLanding were independent contractors. Neither was the agent of the other. (Clause 10.1)
238. The agreement applied to every transaction after 1^st January 2007 in which Unicom offered maintenance services or a licence or an upgrade to an end user (for both TurnOver and SET/TURN).
239. For the entire period of the proceedings and for approximately a year and a half before the proceedings, it was Unicom and not SoftLanding who was providing the maintenance services to the end users, confirmed Mr Watt.
240. His explanation for the existence of the agreement was so that Unicom could show it to the end users to explain why the end users had to pay Unicom instead of SoftLanding is without foundation. This was not a mere accounting exercise.
241. The case that SoftLanding has been advancing throughout these proceedings is that Unicom was merely acting as SoftLanding's agent with respect to SET/TURN licensing upgrades and maintenance, and that Unicom was merely holding the revenue for SoftLanding with respect to SET/TURN licensing upgrades and maintenance.
242. I am satisfied that the same agreement applies to DOCUMENTOR in the same manner that Mr Watt confirmed that it applied to SET/TURN and TurnOver. The evidence in any event demonstrates that TurnOver, SET/TURN and DOCUMENTOR were all handled by Unicom in the self-same manner.
243. During the course of 2007 each single end user of SET/TURN and DOCUMENTOR was tendered an invoice by Unicom and not SoftLanding. By the end of 2007, to the extent that an end user was still on maintenance in accordance with the terms set out in Exhibit B for SET/TURN and/or DOCUMENTOR, it is evident that they were taking their services from Unicom and not SoftLanding.
244. When SoftLanding commenced this claim, the likelihood is that there did not remain a single end user of SET/TURN or DOCUMENTOR for whom they were providing maintenance services.
245. Unicom may have been providing the end user services, but KDP does not owe any contractual duty to Unicom. No such case has been pleaded and no application to add a party.
246. SoftLanding, Inc cannot be said to have suffered any loss, even had KDP been proved to have been in breach.
247. It is inconceivable that SoftLanding, Inc and Unicom Systems, Inc had not carefully considered the financial and legal consequences of the agreement, and had elected with a degree of recklessness or worse to advance the case that Unicom was merely acting as SoftLanding's agent and merely holding the revenue for SoftLanding. From 1^st January 2007 Unicom, as an independent contractor and upon its own account, was dealing with SoftLanding's software assets and was entitled to retain all revenue in relation to these transactions without having to account to SoftLanding, Inc.
248. SoftLandings claim in its entirety is dismissed because on its pleaded case there is no merit and because of the effect of the agreement.

The Claimant's counterclaim and Part 20 claim against Unicom Systems, Inc.

249. Following this trial on issues of liability there is to be a quantum trial. The monetary claim by KDP is based upon breaches of the implied terms as to SoftLanding's obligation to declare and account in relation to the transactions with the end users and to pay the agreed proportions of gross fees to KDP.
250. Notwithstanding the agreement of May 2008, I am satisfied that significant sums were still owing by SoftLanding, in part based upon their contention that there was a fixed fee agreement, and in part because SoftLanding and Unicom agreed payment provisions with end users through intermediaries who were paid out of KDP's royalty entitlement. The precise amount is to be the subject of assessment in the quantum hearing. The continuing lack of candour and compliance with the obligation to account, coupled with the failure to pay the full amounts owing, warranted the termination of the agreements whereby SoftLanding, Inc was authorised to distribute and license KDP's software products and to issue maintenance agreements.
251. The Defendant's counterclaim also seeks relief protecting its copyright in the software products, contending that SoftLanding is in breach by purporting to license end users otherwise than pursuant to the agreed licence, the contents of which were set out in Exhibit B to the original agreements, and also by permitting intermediaries to grant software licenses and maintenance licenses.
252. The terms of Exhibit B were in fact provided by Mr Schlieben of SoftLanding, Inc. The provision as to prepayment is based upon his sage advice contained in his fax of 18^th October 1994, which states:-

"As a matter of policy, I would advise against issuing codes until the cash is in hand. This has been our policy and we have maintained it strictly".

253. The original terms of the fourth paragraph of section 3 of the original agreement entitled "Distributor" was amended in accordance with the draft proposed by SoftLanding, Inc. The relevant passage is:-

"Any amendments to the license must be provided by the Licensor prior to execution of the license by the Distributor".

254. I am satisfied that this term subsisted throughout the parties' dealings by necessary implication. I am also satisfied that SoftLanding, Inc never sought the approval of KDP in relation to any alterations in the agreed prescribed content of the licence. Were such approval sought, then KDP would have been in the position to consider the commercial consequences of such an amendment as well as the legal consequences of such an amendment and to consider whether it supported or diluted the value of their software product. The advantage of the agreed common form licence is that KDP is not placed in the position of having to consider the circumstances of each licence to an end user, which might warrant the expense of taking legal advice and causing delay.
255. KDP submits that it only gave SoftLanding permission to grant licences on the Exhibit B terms. SoftLanding, Inc submitted:-

"As to the point that licences were granted to end users in a form that was different from Exhibit B, KDP directed attention to the change in the choice of law to that of the end user's local law. … It was not proved that the change of governing law had any effect on the terms of the licence, because absent evidence to the contrary, foreign law is presumed to be the same as English law. It follows that licences granted by SoftLanding and its agents are not invalid as alleged by KDP as the result of the law that governs them. As to the other differences, it was generally stated that they were not the same as Exhibit B, but it was not proved how this had any effect on the terms of the licence".

256. It is clear there were significant changes made to the Exhibit B terms. There were changes to the governing law clause which was supposed to be New Hampshire law. There were changes to the pre-invoicing and prepayment dates for maintenance and the incorporation of local standard terms, for example, the FENIT terms in the Netherlands contracts.
257. Changes to those provisions in my judgment are material changes, but that is not the test. It was any change as to the content of the licence that necessitates the prior approval of the licensor, KDP. SoftLanding's authority to grant licences on behalf of the copyright owner, KDP, was in the prescribed terms of the agreement and Exhibit B and no other.
258. Those licences issued which have a content unapproved by KDP, or which contained amendments without their knowledge, are not valid licences. Furthermore, the use of KDP's copyrighted software is wrongfully authorised by SoftLanding Systems Inc and as such may breach KDP's copyright.
259. In relation to SoftLanding Systems Inc's own software products, they employed a number of distributors in different parts of the world. A number of those distributors were also engaged in transactions involving KDP's software products. In so far as such third parties acted as SoftLanding's agent in the grant of licences and KDP's entitlement to royalties was based upon the gross end user fees charged, one can readily see the practicalities of such an arrangement, provided the licence was in proper form and maintenance agreements to support such licences were also in proper form and the appropriate prepayments were made by the end users and SoftLanding to KDP.
260. Of the 38 end users that were on SET/TURN and/or DOCUMENTOR maintenance in February 2007, ten were acquired by SoftLanding/Unicom through four agents: Valok in Australia, Vogelbusch in Germany, Rainbow in Holland and SoftLanding Europe in the United Kingdom.
261. Clause 18 of the agreement, the provisions of which continued implied after termination, provided that:

"This Agreement is personal to Distributor and is not assignable without the prior written consent of the Licensor. Any attempt to assign or transfer or to sub-distribute any of the rights, duties or obligations of this Agreement without such consent is void".

262. On 11^th June 2001 KDP, with the assistance of SoftLanding, wrote a letter addressed:-

"TO WHOM IT MAY CONCERN

This is to confirm that SoftLanding Systems and its Agents are authorised to sell SET/TURN worldwide on behalf of KDP Software Limited".

263. There is issue as to whether the so-called "agents" were agents of SoftLanding or whether they fell into the category that Unicom did after 1^st January 2007, namely a sub-licensed body.
264. A concession was made by the defendant in relation to Vogelbusch that they entered into the appropriate product licence agreements with end users for and on behalf of SoftLanding as, for example, they did in relation to Abbott Diagnostika.
265. In relation to Rainbow Solutions, as exemplified in its product licence agreement with Belden, it is Rainbow who grants the licence and warrants that it has power to do so. This clearly is not an agency agreement.
266. In relation to Valok and their product licence agreement with Olex Cables, the obligations fall expressly on Valok who grant the licence and warrant that they have power to grant the licence. Valok throughout is described as the "re-seller".
267. In relation to the agreements between SoftLanding and their appointing agent, I am satisfied that on analysis Valok and Rainbow cannot be properly described as agents and that SoftLanding by authorising them independently to issue licences and receive in their own right licence and maintenance fees are in clear breach of their obligations of the implied term based on clause 18 of the agreement.
268. Furthermore the licences in any event are not in the Exhibit B agreed terms. There is an issue between the parties as to the payments made by end users for maintenance. KDP contends that they are properly called royalties because they relate to access to source codes. SoftLanding contends this is merely a service charge. It is of some significance, of course, in relation to services rendered by KDP when a product licence was issued by an unauthorised third party in circumstances unbeknown to KDP or, unbeknown to KDP, the purported licence or service agreement was not on the basis of the agreed terms of Exhibit B.
269. Under Exhibit B the end user gets a perpetual and worldwide licence. This is subject to limits.
270. It is for the version of the software that he initially buys. He has no right to patched versions of that software, or new or updated versions of that software.
271. The licence is limited to the computer that he first installs it on, but it does have the benefit of the "alternate installations" clause. This means he can put it on a replacement computer with the same processor group. He is not permitted to put it onto a replacement computer with a different processor group because that would require a new licence.
272. He is entitled to backup his software. If his current installation is destroyed, e.g. in a fire, then he can restore his software onto his replacement computer using his backup tapes. However, what he cannot do if he is not on maintenance is to pre-emptively test his backup tapes. This would mean him running a duplicate copy, and he is not licensed to do this. He only gets such a licence if he is on a licence which entitles him to temporary D.R (disaster recovery) passwords. Similarly, if the system is destroyed, then the end user is entitled to receive a substitute copy of the software – i.e. the same version of the software that he has been licensed to use. It may be that he buys a new computer with the same processor group but with an updated operating system. He is not then entitled to a new version of the software. A maintenance agreement authorises provision to the end user of access to a source code and substitutes.
273. KDP claims that SoftLanding, by virtue of the 1^st January 2007 agreement, has plainly granted a sub-licence to Unicom in respect of SET/TURN and DOCUMENTOR and, by so doing, has authorised Unicom to issue copies of SET/TURN and DOCUMENTOR to the public and also to authorise it to permit the end users to reproduce that software. They contend that Valok, Rainbow Solutions and Oasis 400 are not agents but are re-sellers or sub-distributors and are in the same position as Unicom and thus SoftLanding has infringed copyright in the same way.
274. SoftLanding was the only entity that KDP authorised to grant licences to end users. Whilst this could be done directly or indirectly through an agent, SoftLanding was not permitted to set up a sub-distribution network. When those sub-distributors granted a licence, they clearly did not have the consent of KDP as copyright owners because the purported grant of a licence to an end user involves both issuing the software to the end user, and authorising that end user to reproduce the software by loading it onto the hard drive and into RAM. The only sub-distributor against whom there are infringement proceedings in this action is Unicom. It is contended further that Unicom has also infringed KDP's copyright because Unicom's product licensing agreement is totally different from the agreed Exhibit B terms.

KDP's claim as to breach of copyright

275. This trial is concerned only with alleged breaches of copyright in the United Kingdom and not in other jurisdictions. Those matters are reserved to the second trial.
276. SoftLanding, Inc and Unicom contend that there is no infringement of copyright by the grant of maintenance renewals post termination, since maintenance is purely a service and does not encompass any additional licensing whatsoever relying upon the perpetual licence. I reject that argument for the reasons given earlier.
277. The maintenance support offered to entitled end users included the supply of disaster recovery codes. The end users clearly had a worldwide licence and those codes could be used for a computer located anywhere in the world. When a maintenance renewal is granted, the maintenance offered includes the support that the end user will get together with the disaster recovery codes for whichever country they need during the forthcoming year. The maintenance agreement does not limit the end user geographically. The value of the grant of the licence as part of the maintenance package is clearly a valuable authorisation because the end user will have the reassurance that he has the right to reproduce the software in this manner, should he wish to do so. Clearly the right to reproduce for the purposes of the DR code is a worldwide licence and covers the United Kingdom. Thus a grant of a maintenance renewal by SoftLanding and Unicom post termination authorises the end user to reproduce the software on a DR computer anywhere in the world during the next year, including the United Kingdom. In relation to an entitlement to use a newer version of the software, the same considerations apply.
278. There is no issue in this case as to the ownership of the copyright. KDP is clearly the owner of the copyright in the software, as recited in the original written agreement and acknowledged by SoftLanding in clause 3.5, which continued to be part of the agreement by implication and provides:-

"Distributor agrees to use all endeavours to protect (the software) and not to cause or permit anything which may damage or endanger (the software) or the licensor's title to it …."

279. The infringement alleged is the authorisation of the copying of the whole or a substantial part of the work and the issuing of a copy of the work to the public.
280. Under section 16(2) of the Copyright Designs and Patents Act 1988 it is an act of infringement to authorise the performance of any activities such as reproduction or issuing to the public that are the exclusive right of the copyright owner.
281. It is clear that infringement is complete as soon as authorisation is given. See MCA v Charly Records [2000] EMLR 743. There Rimer J held that infringement was complete when authorisation was given:-

"27. CRL's purported authority to exploit the Chess recordings was given to it by Holdings acting by its agent, International. That purported authorisation was itself a tort (see again section 16(2) of the 1988 Act). An authorisation in this context means: "a grant or purported grant, which may be express or implied, of the right to do the act complained of" (see the CBS Songs case [1988] 1 AC 1013, at page 1054C, per Lord Templeman). MCA's copyright only entitled it to a territorial right within the UK, but it matters not that (as was probably the case) CRL's authorisation was given outside the UK, since it is also a tort to authorise from outside the UK the commission of infringing acts within it … and CRL's infringing activities were carried on within the UK."

282. Then later at [179]:

"The tort of authorisation created by section 16(2) of the 1988 Act is a quite separate tort. It is complete when the authorisation is effected; it is not a tort which is only completed once an infringing act is carried out in pursuance of the authorisation."

283. In ABKCO Music and Records Inc v Music Collection International [1995] RPC at page 657, Hoffmann LJ at page 660 said:-

"There is a striking contrast between section 16(1) which limits the acts restricted by the copyright to acts done in the United Kingdom, and section 16(2) which contains no territorial limit on where the doing of those acts may be authorised."

284. At pages 660 and 661 he continued:-

"I think that a territorial limitation on the act of authorising would lead to anomalies. Anyone contemplating the grant of a licence to do an act restricted by copyright would be able to avoid liability simply by having the document executed abroad."

285. At page 664 Neill LJ said:-

"I have no doubt, that on its proper construction an authorisation given outside the United Kingdom to another to do a restricted act in the United Kingdom is an authorisation to which section 16(2) extends."

286. The licences granted by SoftLanding are international in their ambit. They authorised acts of infringement throughout the world and therefore also authorised acts of infringement in the United Kingdom. It is clear on the authorities that authorisation, provided it covers acts in the United Kingdom, is a tort regardless of where the authorisation was given. It thus covers both the product licence agreements and maintenance agreements for which SoftLanding directly or indirectly was responsible.

Copyright damages

287. The proper approach is to put the copyright owner in the position he would have been had the tortious act not occurred.
288. Post termination KDP contends that if Unicom had not been offering SET/TURN maintenance to end users, then KDP could have offered this service directly to end users itself. This would have been entirely feasible, I am satisfied, on the evidence that I have heard. The fact that there is partly a service element, for instance by providing telephone access and the like, does not detract from the reality that the end user would have been likely to take a full package from the same person. It would have been able to charge 100% of the fee that Unicom charged the end users in respect of the sum charged for both SET/TURN maintenance and socket for SET/TURN maintenance.
289. The grant of remedies in intellectual property matters is governed by the Directive 2004/42/EC, Article 13 (implemented in Paragraph 3 of the Intellectual Propert (Enforcement etc) Regulation 2006, S.I. 2006 No. 1028) provides that:-

"1. Member States shall ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement.

Where the judicial authorities set the damages:

(a) they shall take into account all appropriate aspects, such as negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement;

or

(b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question."

290. Article 13(b) warrants an award, therefore, on a willing licensor/willing licensee basis.
291. The particulars contained in the table annexed to KDP's pleading have been overtaken by events. Additional invoices from "International Agents" have been disclosed during the course of the trial and need to be taken account of. The agreement of 1^st January 2007 shows that an assignment without permission was made by SoftLanding, Inc to Unicom Systems, Inc and that all authorisation and maintenance agreements entered into by Unicom are clearly infringements.
292. KDP is entitled to 100% of the amounts paid by end users after 1^st January 2007 on the basis that there was a willing licensor and a willing licensee and that Unicom was acting in its own right and not as SoftLanding's agent.

The claim

293. On 19^th December 2008, on the Claimants' application for mandatory interim relief, the Defendant pending the trial of the claim were ordered to provide the Claimant with a temporary password for SET/TURN and DOCUMENTOR for a specific customer within two working days of receiving a written request, provided the Claimant specified the name of the customer, whether in respect of SET/TURN and/or DOCUMENTOR and details of the model number, processor group and serial number of the customer's new and old computers and the date of the current annual maintenance licence taken by the customer. That order has been continued until judgment in this case.
294. Paragraphs 24 and 25 of the Particulars of Claim seek the following relief:-

"24. In the premises SoftLanding ask the court to grant specific performance of clauses 7, 10.3 and 10.4 of the agreements and/or a mandatory injunction and in particular that the court order KDP to deliver up to SoftLanding the source code for the product and/or passwords for the end users.

25. Further or in the alternative SoftLanding claims damages in lieu of or in addition to specific performance pursuant to s.50 of the Supreme Court Act 1981 to be assessed by the court."

295. There is no evidence that KDP are in breach. The Claimant is not entitled to the relief claimed.
296. In relation to the end users who were in breach of their Exhibit B obligations they have ceased to be entitled to SoftLanding's support. Those party to an agreement with Unicom Systems, Inc are not entitled to KDP's continuing support. Those granted new maintenance agreements after 4^th July are not entitled to KDP support. KDP advance arguments that in any event SoftLanding was not entitled to the injunctive relief claimed because SoftLanding did not come to the court with clean hands either in December 2008 or in relation to the current hearing.
297. Since after a full hearing it has been determined that SoftLanding have not established a contractual entitlement to relief, and there is no basis upon which further equitable relief could be granted. Nonetheless KDP invites the court to discharge the interim injunction, since there was material non-disclosure by SoftLanding and economies with the truth as to the true financial status of SoftLanding in relation to security for costs. Furthermore it is said that the chief financial officer of both SoftLanding and Unicom misled the court both in sworn pleadings and evidence as to the relationship of SoftLanding with Unicom.
298. More seriously, it is said that the court was misled as to the conduct of KDP in relation to the supply of passwords to entitled end users.
299. When pressed in cross-examination during this trial, Mr Neil Watt accepted that the court in December of 2008 had been materially misled, particularly as to the examples of end users left unsupported. These were material matters he accepted that if a proper check had been made with SoftLanding, the true position would have been ascertained. Mr Watt was reckless in what he was prepared to put forward as sworn evidence, he knew that since it would not be tested, reliance would be placed upon it by the court despite the fact that the proceedings were nominally inter partes. Certainly throughout the pleadings and in his sworn evidence he has asserted that Unicom provided "back room" facilities for SoftLanding when in fact SoftLanding had assigned its business in relation to software and the right to receive payments to Unicom, who were not acting as an agent for convenience but as an independent contractor.
300. Thirdly, SoftLanding failed to disclose the agreement in the interim injunction proceedings or in relation to these proceedings until they were forced to following a chance unintended reference to it by Mr Watt.
301. Fourthly, the licence agreements with end users since 1^st January 2007 have been with Unicom Systems, Inc and not between SoftLanding and the end users.
302. Mr Neil Watt, SoftLanding and Unicom made a deliberate decision not to disclose these agreements. He confirmed this to be the case in cross-examination. They would have shown the true relationship between SoftLanding Systems, Inc and Unicom Systems, Inc and KDP.
303. Fifthly, in relation to their pleaded case in relation to annual maintenance agreements and charges, it was asserted that a significant technical enhancement, "a socket" device, had been added. It was eventually admitted under pressure by Mr Zurich and by Mr Watt that this was a marketing device and a sham enabling Unicom to enhance their charges and to diminish that attributed to KDP support, thereby diminishing their royalty entitlement.
304. Lastly, in relation to the application for security for costs, Mr Watt on behalf of SoftLanding, whilst pleading that SoftLanding was commercially vulnerable and with modest resources, also asserted that Unicom and SoftLanding were a unitary business, but failed to mention that Unicom was cash-rich and was in a position in early January to purchase a software business for $52m cash.
305. In my judgment the effect of the baseless allegations, the non-disclosure and the misleading evidence is such that it is not sufficient to reflect disapprobation in costs terms, as Mr Onslow submits, but to discharge the injunction under CPR 3.1(7). Mr Watt's conduct, accepted in relation to failing to check as being unprofessional and wrong, did not rest there. As an officer of both companies he was party to a deliberate decision to withhold relevant material from the court, both in 2008 and in 2009, for the purposes of litigation advantage. On day 6:-

"Q. What you are saying now is notwithstanding that SoftLanding has started a claim in which it sought the most draconian relief it could: essentially delivery up of the source code on an interim basis, and notwithstanding, it was clearly an issue whether there were licences on what terms, all the disclosure obligations that go with it, in January 2009 you are saying SoftLanding decided it was still not going to provide them?

A. Hmm.

Q. Even though those proceedings … after: is that what you are saying? [i.e. after the proceedings had started]

A. That was our best business judgment, how to respond to it, yes. The best way to protect our business.

Q. Even though there is a duty to disclose them, it was best to protect your business by not disclosing them, is that what you are saying?

A. This litigation was about protecting our business and we needed to protect our business.

Q. Even if it did mean not playing by the rules?

A. We needed to protect our business. That's what we were doing.

Q. Even though it meant flouting the rules of procedure in the English proceedings?

A. We were trying to protect our business.

Q. At all costs?

A. We were trying to protect our business from KDP."

306. This passage, sadly, demonstrates the raw and ruthless way in which SoftLanding and Unicom, through its officer Mr Watt and signatory to the pleadings Mr Hong, were willing to further their commercial, interests. The failure to disclose in relation to these proceedings, as well as to mislead, mirrors the contractual failure to disclose that concealed from the Defendant the fact that it was being underpaid.
307. It is conduct by a practising attorney that sits uneasily with the wholly unjustified allegations which are tantamount to fraud against the Defendant, the bogus allegation of an agreement to change from alleged fixed fees to percentage royalties, and a specious and time-wasting case as to the genesis of written agreements concluded in 1995. In my judgment this is an exceptional case which, on the true facts, shows that the interim relief was not necessary for entitled end users and that the original application was for the interim giving up of the copyrighted source code. Such material non-disclosure as in this case clearly falls within the comments of Patten J in Lloyds Investment (Scandinavia) Limited v Christen Ager-Hanssen [2003] EWHC 1740 (Ch), where at paragraph 7 he said:-

" … It seems to me that the only power available to me on this application is that contained in CPR Part 3.1(7), which enables the court to vary or revoke an order. This is not confined to purely procedural orders and there is no real guidance in the White Book as to the possible limits of the jurisdiction. Although this is not intended to be an exhaustive definition of the circumstances in which the power under CPR Part 3.1(7) is exercisable, it seems to me, that for the High Court to revisit one of its earlier orders, the applicant must either show some material change of circumstances or that the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position before him. The latter type of case would include, for example, a case of material non-disclosure on an application for an injunction … "

This passage was approved in Collier v Williams [2006] 1 WLR 1945 at page 39.

308. There is a second application before me on the claim that is for summary judgment. The Claimant's concern is as to end users left without support who will inevitably claim against SoftLanding and Unicom. Mr Onslow contends that there is a black hole and "the idea that KDP should be able to escape liability for this aggravated damage (to end users) by relying on an intra-group between SoftLanding and Unicom is monstrous".
309. Suffice it to say that there is no black hole. The end users may have some recourse against SoftLanding and Unicom. That SoftLanding is left without the support of KDP is a matter of SoftLanding's own making.
310. The end users' position is perhaps best safeguarded by being able to go uninhibited to the market which includes KDP, if SoftLanding and/or Unicom are unable to provide the services they have contracted to provide.
311. Both the Claimant and Third party have wrongfully granted licences in respect of SET/TURN and DOCUMENTOR, and wrongfully granted maintenance agreements. SoftLanding enabled Unicom to wrongfully represent that it had the right to grant licences and enter into maintenance agreements worldwide in respect of SET/TURN and DOCUMENTOR after 1^st January 2007 by means of the purported assignment 1^st January 2007. Any such breaches of Unicom after 1^st January 2007 were knowingly facilitated by SoftLanding. SoftLanding clearly colluded in the failures throughout to furnish end user details to the Claimant thereby concluding the maintenance status and thereby the entitlement of end users, and the unauthorised form and content of licences and maintenance agreements.

SoftLanding and Unicom are jointly and severally liable as joint tortfeasers for breaches after 1^st January 2007.

The Counterclaim – KDS is entitled

1) To an injunction restraining Claimant and Third Party from infringing KDP's copyright in the software and from authorising others to do acts that infringe KDP's copyright in the software.

2) An order that the Claimant and Third Party pay for appropriate measures to be taken for the dissemination and publication of the judgment and orders made pursuant thereto.

3) A declaration that SofLanding and Unicom do not have KDP's consent or licence to (i) grant licences in respect of Set/Turn or Documentor; or (ii) grant support/maintenance agreements in respect of Set/Turn or Documentor that places any obligation on KDP whether for the provision of passwords or otherwise.

4) An order that SoftLanding and/or Unicom pay damages on the basis set out in the Amended Particulars of Breaches and Particulars of Loss and Damage. Costs to be assessed.